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Employment & Labour

Province's holiday pay reversal good news for employers

Toronto employment lawyer Deborah Howden says her clients are pleasantly surprised by the provincial government’s reversal on the calculation of public holiday pay.

Howden, a partner with Shibley Righton LLP's Toronto office, says the initial changes, which took effect on Jan. 1 as part of the wide-ranging Bill 148, the Fair Workplaces, Better Jobs Act, were met with immediate resistance from small business owners.

But in a recent announcement, Ontario’s Ministry of Labour said it would reinstate the previous method while it reviews the public holiday system.  

“I am a little surprised over the reversal, but also very glad to see it because, from my perspective, the new rules didn’t make much sense,” Howden tells AdvocateDaily.com. “It appears that the feedback from employer stakeholders struck a chord with the government.”  

She says businesses were confounded by the new calculation method because it appeared to boost the entitlements of casual and part-time employees, and discouraged some from hiring new people in those roles.

Under the old system, which will be reintroduced as of July 1, 2018, public holiday pay is calculated by taking the total earnings of an employee in the four weeks prior to the holiday and dividing it by 20, the number of working days in the period.

As a result, full-time employees will again receive a full day’s pay for statutory holidays, half-time employees receive half a day’s pay and those who work one full day a week receive one-fifth of a day’s pay.

Under the soon-to-be revoked formula for public holiday pay, calculations were carried out by dividing the total earnings of the employee in the last pay period before the holiday, and dividing it by the number of days worked. Under that system, the full-time and half-time employees received identical statutory holiday pay, and those working one day a week received a full day’s pay for the holiday.

“From a compensation point of view, there was not much rationale for it,” Howden says.  

The ministry says it hopes to have a new regime in place by 2020 following the planned review.

“The Changing Workplaces Review was about bringing more fairness to workplaces in Ontario," Labour Minister Kevin Flynn said in a statement. "Bill 148 is a reflection of that vision, with measures such as a $15 minimum wage, equal pay for equal work and paid sick days put in place in order to ensure that workers’ rights are always protected and that they are paid a decent wage.

"This review of the public holiday pay section of the Employment Standards Act is part of our overall commitment to address the realities of the modern workplace and create a fair society,” he said.

Howden says the episode has encouraged some of her employer clients to consider pushing the government for further reversals following the passage of Bill 148. Small businesses have also objected to other measures in the legislation including additional protections for on-call employees and the increased minimum wage, she says.

“I tell them that it is unlikely we will see any more reversals, but you never know,” Howden says.

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