The Ontario Ministry of Labour has announced that it will be undertaking a review of the public holiday provisions in response to a significant number of complaints received about these provisions. In the interim, the Ministry has also announced that effective July 1, 2018, it will revert back to the previous formula for calculating public holiday pay (i.e. the formula that applied before the implementation of Bill 148).
The new public holiday pay formula (the “New Formula”), introduced as part of Bill 148, came into effect on January 1, 2018 and was met with intense criticism from employers for being costly and unfair. The New Formula requires employers to calculate public holiday pay by taking the total amount of regular wages an employee earned (and vacation pay payable) in the pay period before the public holiday and dividing it by the number of days the employee worked in that pay period. As a result, under the New Formula, a part-time worker who only works a single eight (8) hour shift in the preceding pay period, earning $15/hour, would receive $120 in public holiday pay (i.e. eight (8) hours of regular wages). An employee who worked eight (8) hours per day for ten (10) days in the preceding pay period earning $15/hour would receive the same amount of public holiday pay as that part-time employee (i.e. $120).
The previous formula for calculating public holiday pay (the “Old Formula”), which will again be in effect starting July 1, 2018, requires employers to calculate public holiday pay by taking the total amount of regular wages an employee earned (and vacation pay payable) in the four (4) weeks before the work week in which the public holiday occurs and dividing that amount by 20. Using the Old Formula, that same part-time employee who worked one eight (8) hour shift in the four (4) week period, earning a rate of $15/hour, would receive $6 of public holiday pay. A full-time employee who worked 160 hours in the four (4) week period at the same hourly rate would receive $120 of public holiday pay.
The New Formula has substantially increased public holiday pay costs for employers with part-time workers, and has undoubtedly caused many employers to implement other cost saving measures such as layoffs or reduced hours in an effort to mitigate increasing labour costs.
While the New Formula remains in effect for the Victoria Day Holiday, starting with Canada Day, public holiday pay in Ontario will once again be calculated using the Old Formula, at least for the time being. The Ministry’s decision to revert to the Old Formula is an interim measure that is set to be revoked on December 31, 2019. In the meantime, the Ministry has announced it will be conducting a more comprehensive review of the public holiday system following feedback and discussions with stakeholders.
The foregoing is for informational purposes only, and should in no way be relied upon as legal advice. For legal advice tailored to your circumstances and business, please contact any of SOM LLP’s lawyers by email or telephone.