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Change to Public Holiday Pay Formula – effective January 1, 2018

Friday, December 15, 2017

As a result of Ontario’s Bill 148, the formula for the calculation of public holiday pay in the Employment Standards Act (ESA) will be amended effective January 1, 2018, as follows:

PUBLIC HOLIDAY PAY – FORMULA
Prior to January 1, 2018 Effective January 1, 2018
Total amount of regular wages earned by the employee in the four workweeks immediately preceding the public holiday, divided by 20 Total amount of regular wages earned in the pay period immediately preceding the public holiday, divided by the number of days actually worked in that pay period

The amended formula considers the regular earnings in the pay period immediately preceding the public holiday, and divides the earnings by the number of days the employee actually worked in the period. The following table illustrates the change with an example based on a casual employee working 3 days per week, earning $100 per day (or $600 on a biweekly basis): 

Prior to January 1, 2018 Effective January 1, 2018
PUBLIC HOLIDAY PAY – CALCULATION EXAMPLE

4 weeks x $300 = $1,200

$1,200 / 20 = $60

2 weeks x $300 = $600

$600 / 6 working days = $100

REMINDER:      

For ESA purposes, regular wages are defined as wages other than overtime pay, public holiday pay, vacation pay (where included with each pay), premium pay, termination pay, and severance pay. For casual employees, this means that regular time worked (productive time) and paid training hours would be included as part of the calculation (overtime hours would be excluded).

Managers with employees, who are eligible for public holiday pay, please ensure you are using the new calculation as demonstrated above.

Additional Changes to the public holiday provisions of the ESA:

Where an employee works on any public holiday, payment will be public holiday pay plus premium pay for the hours worked. Thus, Bill 148 has removed the option of providing employees with a substitute day off in this circumstance.

Example

Using the same example above, if the employee worked on the public holiday they would be paid $150 (regular rate x 1.5) and would receive $100 in Public Holiday Pay for a total of $250 for the day.

Where a public holiday falls on an employee’s day off, the general rule will be that, the employer must provide a substitute day off with public holiday pay. In these cases, Bill 148 requires the substitute day to be either the last work day prior to the public holiday or the first work day after. Employers and employees can still agree to forego the substitute day off and simply provide public holiday pay in lieu of the time off.

*There are significant changes to the Employment Standards Act (ESA) that are also coming into effect. More information regarding these upcoming changes will be shared with you shortly.

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