Ontario has recently introduced many changes to employment legislation, which have had wide-ranging impacts on staffing agencies and businesses alike. One of the most talked-about has been the changes to minimum wage legislation, but the government bill included provisions on many subjects. Leave, holiday pay, equal pay, unionization, and scheduling were all addressed.
The government initially drafted the bill containing most of these changes last spring to follow up on recommendations of a special committee. Following the release of the draft, there was much debate, and continuing conversation with stakeholders led to a number of revisions before the bill was passed in November.
Even after the legislation was passed, however, discussions continued. The government considered feedback from many different stakeholders. The legislation continues to be amended and tweaked.
One recent update has been to public holiday pay and how it will be calculated. The government’s latest revisions happened on May 7, 2018, and took effect on June 1, 2018.
Reverting to the Tried and True
Ontario Regulation 375/18 was filed on May 7, 2018, and went into effect on June 1, 2018. It essentially restores the previous formulation for calculating public holiday pay. Many stakeholders expressed concerns about the proposed new formula, even before the government passed Bill 148 in November.
The new proposed formula appeared to have been made without a proper review of the impacts, which prompted concerns from stakeholders. Through continuing dialogue, the Minister of Labour determined there were legitimate concerns and proposed to revert to the old formula between June 1, 2018, and December 31st, 2019.
Missing the May Holiday
Unfortunately, the change didn’t come into play soon enough. Staffing agency owners needed to calculate public holiday pay for the Victoria Day holiday using the new formula. Under this method, agencies must divide regular wages earned during the pay period prior to the holiday over the number of days worked in that period.
For example, if an employee worked five days and earned $420, they would need to be paid $84 for the public holiday.
Looking Forward to Summer Long Weekends
The old formula was restored on June 1, 2018, which means the remaining holidays of the summer and the rest of the year will be calculated using the older method. The Canada Day public holiday will see Ontario staffing agencies return to the previous formula. Every public holiday for the year of 2019 will also follow this formula.
Ensure your payroll provider and HR staff are well aware of the change and have reverted back to the older method.
The Previous Formula
A reminder about the older formula is in order since it’s about to be reinstated. Under this formula, public holiday pay should account for the total amount of regular wages earned and vacation pay payable for the four work weeks before the week of the holiday. This amount is then divided by 20.
For example, if the hypothetical employee had earned $420 each week for the four weeks prior to Canada Day, their total amount would be $1,680. Their payable vacation pay would also be factored in, and the total divided over 20. This employee would earn approximately $87 as public holiday pay.
A New System in 2020
The reinstatement of the previous formula is currently scheduled to end on December 31, 2019. Until then, the Minister of Labour plans to study the impacts of changing vacation pay formulas and how to make these changes better for everyone involved.