Canada statutory holiday pay: the basics

Summary:

• Workers in Canada get statutory, or public, holidays off and receive pay based on a percentage of their wages earned over a 4-week period.
• If employees are required to work on a statutory holiday, they typically earn 1.5x their regular rate in addition to their holiday pay.
• Time and attendance software makes holiday pay calculations much more accurate and efficient.

It’s that time of the season again – that time when all I can hear ringing in my head is Andy William’s strikingly porcelain teeth droning “Happy Holiday” on repeat.

But do me a favor and close your eyes for a second. Picture our beloved Michael Bublé singing instead of Andy. How wonderful would that be? Who better to sing this Christmas classic than the Canadian Crooner himself?

Nothing puts me in the mood for a holiday more than Michael Bublé. But I am not a hard man to please. For many Canadian workers, not even Michael Buble can salvage a holiday derailed by improper pay calculations.

Getting holiday pay wrong

When a holiday strikes, it’s important for Canadian employers to know exactly how much they owe their staff in statutory holiday pay – getting this wrong can land you in hot water.

Monkhouse Law is all too familiar with this. Earlier this year, they filed a class action lawsuit against banking giant BMO for violating the Canada Labour Code. According to the suit, BMO failed to include variable compensation such as commission and bonuses in calculations for holiday and vacation pay owed to employees beginning all the way back in 2010.

Similar holiday pay cases have been brought against insurance companies RBC and Aviva for $800 million and $80 million, respectively.

Holiday pay rules

To avoid winding up with a multi-million dollar lawsuit on your hands, or at the very least, a mob of rightfully angry workers, it’s important to understand what you as a business owe in holiday pay and how to go about calculating it.

Workers in Canada get statutory paid holidays (also known as public holidays or general holidays) off and are entitled to compensation based on their previous weeks’ wages. This public holiday pay is generally calculated as 1/20 of an employee’s regular pay from the 4 work weeks leading up to the holiday. Variable compensation like vacation and commission is usually included in the holiday pay calculation, while overtime is not.

On top of this pay, most provinces mandate that anyone who works on a holiday receive time and a half for their trouble. This is a rule of thumb, however, and not always the case.

Listed below are more details on statutory holiday pay, broken down by several provinces:

Manitoba

Statutory holidays recognized: 

• New Year’s Day
• Canada Day
• Louis Riel Day
• Good Friday
• Victoria Day
• July 1st
• Labor Day
• Thanksgiving Day
• Christmas Day

Holiday pay: Employees with non-variable hours receive holiday pay equal to 8 hours at their standard rate. For employees with variable hours, holiday pay is calculated at 5% of their gross wages (not including overtime) in the 4-week period immediately before the holiday.

If employees work: on top of their statutory holiday pay, staff who work on a holiday earn premium pay, which is 1.5x their regular wage. An exception exists for hospitals, restaurants, hotels, and continuous operations as long as they provide another day off with general holiday pay within 30 days.

New Brunswick

Statutory holidays recognized: 

• New Year’s Day
• Family Day
• Good Friday
• Canada Day
• New Brunswick Day
• Labour Day
• Remembrance Day
• Christmas Day

Holiday pay: Employees receive a day’s wages at the regular rate or 4% of their gross wages. If employees have variable hours, they receive an “average day’s pay” which is found by dividing their total number of hours worked by the number of days worked over a 30-day period before the holiday. You then multiply these hours by the regular rate. This calculation excludes overtime but includes vacation.

If employees work: Employees receive 1.5x their regular rate of pay for the day on top of the statutory holiday pay.

Ontario

Statutory holidays recognized: 

• New Year’s Day
• Family Day
• Good Friday
• Canada Day
• Victoria Day
• Boxing Day
• Labour Day
• Thanksgiving Day
• Christmas Day

Holiday pay: According to Ontario’s Employment Standards Act (ESA), employees get 1/20 of their wages from the previous 4 weeks before the week with a public holiday. This includes vacation but not overtime pay.

If employees work: employees receive 1.5x their regular rate for the day.

Quebec

Statutory holidays recognized: 

• New Year’s Day
• Good Frida or Easter Monday (employer’s discretion)
• Canada Day
• National Patriot’s Day
• National Holiday
• Labour Day
• Thanksgiving
• Christmas Day

Holiday pay: Employees receive 1/20th of their wages from the 28 days prior to the holiday. Workers paid by commission receive 1/60th of their wages earned through a 12-week period. Overtime is not included in these calculations.

If employees work: Employees get paid for a regular day’s work at their normal rate on top of receiving holiday pay.

Saskatchewan

Statutory holidays recognized: 

• New Year’s Day
• Family Day
• Good Friday
• Victoria Day
• Canada Day
• Saskatchewan Day
• Labour Day
• Thanksgiving Day
• Remembrance Day
• Christmas Day

Holiday pay: Employees receive a 5% of their wages from the 28 days before the holiday. This calculation includes both vacation and commission but not overtime.

If employees work: Employees receive 1.5x their regular rate for the day on top of the statutory holiday pay.

Calculating holiday pay

Yes, there are a lot of rules, exceptions, and intricacies to holiday compensation in Canada. To stay on top of it all, you need be tracking time and pay accurately. You also need to be executing the right calculations – sometimes at a very large scale.

Sure, you can use a handy-dandy holiday pay calculator found on the occasional government website. But you could also let software automatically do the work for you.

Time and attendance software not only tracks employee time on a daily basis, but it also calculates holiday pay, applying it directly to timesheets. You don’t have to worry about combing through four-weeks worth of timesheets just to calculate the right indemnity pay for a single special day of the year.

Be prepared and get a system in place to calculate holiday pay for you.

Who should be working on public holidays?

Calculating mandated holiday pay is one thing – paying time and half to staff who work on a holiday is another. Labor hours on a holiday are quite an expense to take on, and if not planned correctly, can be unnecessary at times.

So how do you actually determine the number of staff you need on hand during a holiday?

The first step is to consistently track your historical demand patterns. By doing this, you’ll be able to project your expected demand for an upcoming holiday. Typically this is done by looking at last year’s holiday sales alongside other patterns like upcoming local events, promotions, and weather.

With an accurate demand prediction, you can then figure out the number of employees you’ll need on duty. Backing your staffing plan with actual metrics like this keeps you from accidentally overspending on expensive holiday labor. You should only be paying 1.5x rates to employees who are actually needed.

Sounds like a lot of work, right? Building demand predictions and determining labor ratios? The good news is that you don’t need to do all the work. Labor forecasting software makes this whole process easier, saving you admin time and cutting down on wasted time and a half pay.

Get it done efficiently

Once you know the basics, holiday pay is pretty simple to understand – you just need the right tools to improve accuracy, save time, and ensure compliance.

With an all-in-one workforce management platform like Workforce.com, you can record employee hours and automatically calculate holiday pay when the time comes. Complete with a labor forecasting module, you’ll also be able to predict how many staff you really need working those expensive holiday hours.

When a paid public holiday like New Year’s or Canada Day comes around, it’s more important than ever to keep your employees happy – this means abiding by national labour standards and paying them what they are legally owed. Get this done in the most efficient way possible while also improving your bottom line with Workforce.com.

Get in touch with us today to get started.