Canada: Ontario reverting to earlier public holiday pay calculation formula on July 1, 2018

Effective January 1, 2018, several amendments were made to the Ontario Employment Standards Act, 2000 (the “ESA”), including a revised public holiday pay formula.

Prior to the amendments, public holiday pay was calculated as equal to the total amount of regular wages and vacation pay earned by the employee in the four weeks before the public holiday, divided by 20.

Following the amendments, an employee’s entitlement to public holiday pay must be calculated as follows: the total amount of regular wages that the employee earned in the pay period immediately before the public holiday divided by the number of days that the employee worked in the pay period immediately before the public holiday.

The change to the public holiday pay formula was not well received by all affected parties. On May 7, 2018, the Ontario Government announced that it would review the public holiday system under the ESA. The review will be conducted in 2018 by the Ministry of Labour and will form part of the Ontario Government’s on-going response to the Changing Workplaces Review, the comprehensive review of the province’s labour and employment legislation that lead to the broad sweeping amendments that came into force on January 1, 2018.

As an interim measure, the Ontario Government introduced Ontario Regulation 375/18. The new regulation, which will come into effect July 1, 2018, states that the public holiday pay formula will revert to that which existed prior to the amendments. The regulation will remain in effect until December 31, 2019.

The next public holiday is Victoria Day, on May 21, 2018. As the new regulation will not be in effect at that time, employers will be required to use the public holiday pay formula set out in the amendments effective January 1, 2018. However, for public holidays following Victoria Day, beginning with Canada Day on July 1, 2018, employers will revert to the old formula.