The Ontario Government is abandoning its current method for calculating public holiday pay which came into effect under the Fair Workplaces, Better Jobs Act, 2017 (“Bill 148”). Employers will need to revert back to the previous calculation method, although this reversal is only temporary. Ontario plans to introduce yet another calculation method following a review of the public holiday system, which is proposed to occur later this year.

Key Takeaways

Starting on July 1, 2018, employers will once again calculate public holiday pay by taking the employee’s total wages in the four weeks prior to the work week in which the public holiday occurs and dividing that number by 20. Next month’s provincial election may impact whether Ontario moves forward with its planned review and the introduction of a new calculation method. Employers who wish to make submissions regarding the method for calculating public holiday pay can direct these to: exemptions.review@ontario.ca.

Background

Prior to January 1, 2018

Prior to the legislative amendments under Bill 148, employers were required to calculate public holiday pay by taking the employee’s total wages in the four weeks prior to the work week in which the public holiday occurs and dividing that number by 20.

January 1, 2018 until July 1, 2018

The current calculation method came into effect on January 1, 2018 under Bill 148. Under the current method, an employee’s public holiday pay is equal to the total amount of regular wages earned in the pay period immediately preceding the public holiday, divided by the number of days the employee worked in that period.

This method was controversial since it can be costly for employers and may disproportionately benefit employees who work less than full-time, for example:

  • an employee who works one 8-hour shift per week would be entitled to the same public holiday pay as an employee who works five 8-hour shifts per week;
  • an employee who works one 8-hour shift per week would be entitled to double the public holiday pay of an employee who works two 4-hour shifts per week; and
  • an employee who works for multiple employers per week could be entitled to multiple days of public holiday pay.

Following feedback and discussions with stakeholders, Ontario decided to revoke the current calculation method.

July 1, 2018 and future reform

As of July 1, 2018, employers will need to calculate public holiday pay by taking the employee’s total wages in the four weeks prior to the work week in which the public holiday occurs and dividing that number by 20. This calculation method has been put into effect by Ontario Regulation 375/18. The Regulation will be revoked on December 31, 2019. Ontario’s plan is that the Ministry of Labour will conduct a review of the public holiday system later in 2018 and introduce a new calculation method.