Public holiday pay (also known as “statutory holiday pay” or “stat holiday pay”) is often one of the biggest causes of confusion for Ontario employers running payroll — but it’s easier to understand and pay out correctly than it may seem at first sight. In this guide by Knit’s payroll accounting experts, you will learn how to accurately calculate stat pay, every time, for all your employees.
Statutory holiday pay is a special income type that Ontario employers are required to pay during designated public holidays. Assuming that employees meet eligibility criteria (more on that below), during public holidays employers are required to do BOTH:
These rules apply only to statutory holidays — i.e.: days that the provincial government has officially designated as public holidays. In other words, not all holidays are statutory holidays. For example, some employers may give their employees a holiday on Remembrance Day or Easter Monday — but there is no legislation requiring to give employees days off, so it’s up to each individual employer to determine whether they will treat the day as a holiday.
Currently, Ontario has 9 statutory holidays:
For any updates to Ontario’s public holiday list, refer to the official Employment Standards Act ESA guidelines here.
You should look at two factors to figure out if an employee is eligible for holiday pay or not:
Chances are that the Employment Standards Act (ESA) applies to your business — the vast majority of Ontario’s employees are covered by the ESA. However, some industries are exempt, and certain jobs may be governed by special rules. To find out if your industry is exempt or is governed by special rules, head over to ESA’s official guide on exemptions and special rules.
If your industry is not exempt, the next step is to check whether the employee fails to meet the qualification requirements due to the “last and first rule.”
The rule states that an employee fails to qualify for public holiday pay when the employee, without reasonable cause, either:
There are a few more important rules to keep in mind in addition to the “last and first” rule:
Before you plug numbers into any holiday pay calculator, it’s helpful to understand how the calculation is made.
First, you’ll need to know what your typical work week schedule looks like. For example, in some industries the work week falls between Monday and Sunday. However, every business is unique, and your work week may have a different schedule — for instance with Tuesday considered to be the first day of the work week, and Monday the last.
Once you know what your business’ work week looks like, it’s time to look at the previous 4 work weeks that fell before the week of the public holiday. The calculation here is actually pretty straightforward: take all of the wages earned (including vacation payable) by the employee in the 4 work weeks prior to the holiday, and divide the total by 20. This will give you the amount you need to pay for the public holiday.
Once you understand the rules behind the calculation, you can also use a public holiday pay calculator provided by the Ministry of Labour.
There are three scenarios when it comes to statutory holiday pay and vacation pay:
In scenario #1, the stat holiday calculation will include all of the wages earned, plus the percentage of vacation pay — typically 4%, unless the employee meets the requirements for a 6% vacation pay rate.
In scenario #2, vacation pay will be included in the stat holiday pay calculation only if the employee was on vacation at any time during the 4 week work period.
In scenario #3, vacation pay is included in the stat holiday pay calculation only if the lump sum vacation payment data falls within the applicable 4 week period.
As outlined in the Employment Standards Act section on vacation and public holidays, if an employee is on vacation during a statutory holiday, one of the following can happen:
Let’s take a look at an example of how to pay out holiday pay for an employee. John earns $15/hour, gets paid vacation on every cheque, and his work week starts on Friday and ends on a Thursday. Here’s how you would calculate his holiday pay for Canada Day, July 1st, in 2020:
July 1st falls on a Wednesday, so the work week with the public holiday in question will be:
Holiday week: Thursday, June 26 to Friday, July 2
Now, we will take the 4 work weeks prior to this work week, and calculate the total wages earned:
Work Week 1: June 19 (Friday) to June 25 (Thursday) = 20 hours worked x $15/h = $300
Work Week 2: June 12 (Friday) to June 18 (Thursday) = 30 hours worked x $15/h = $450
Work Week 3: June 5 (Friday) to June 11 (Thursday) = 20 hours worked x $15/h = $300
Work Week 4: May 29 (Friday) to June 4 (Thursday) = 30 hours worked x $15/h = $450
Total earned during the 4 week period: $1,500
Total vacation payable from the period: $60 (4% of $1,500)
Total public holiday pay to be paid: $78 ($1,560 / 20)
In this example, John would have to be paid $78 for July 1st, Canada Day.