Employment Law 101: Vacation and Statutory Holiday Pay

Written by on October 22, 2018 in Employment Law Blog, Employment Law Issues
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An important aspect of work is time off from work. Employees in Ontario are entitled to vacation benefits, which include vacation time, vacation pay, and statutory holiday pay. These benefits are governed by the Employment Standards Act, 2000 (the “ESA“).

As most Ontario employers and employees know, the ESA changed significantly in 2018 with the passage of Bill 148: the Fair Workplaces, Better Jobs Act, 2017. Bill 148 ushered in changes to both vacation time and vacation pay.

Under the ESA, employers must now provide a minimum of three weeks of vacation to employees who have worked for them for five years or more. For employees of less than five years, minimum vacation entitlement remains at two weeks’ time off, in one twelve-month employment cycle. In addition to vacation time, all employees – including seasonal, part time, and temporary workers — receive a minimum vacation pay of four percent of their wages depending on their length of service. Employees with five or more years of service now receive six percent of their wages.

Employers may choose when employees can take time off and may insist that employees take their vacation in one-week increments. They must, however, ensure that their employees take this time off, and employers will be penalized if their employees fail to do so.

When an employer has a vacation policy or has agreed to vacation-related terms in an employment contract that provide a greater benefit to employees than these minimum statutory requirements, the employer should ensure that it complies with the applicable policy or agreement.

In addition to vacation time, Ontario employees are entitled to take each of the province’s nine statutory holidays off work, with pay. An employer may not deduct wages for public holidays. An employee may agree in writing to work on a statutory holiday, with stat pay.

On May 7, 2018 the Ontario government announced that the province will conduct a review of the Public Holiday System under Part X of the ESA. While it conducts this review, the government has reverted to the pre-Bill 148 formula for calculating public holiday pay. Prior to Bill 148, the calculation for public holiday pay under the ESA was the amount equal to total regular wages and vacation pay earned over the previous four weeks, divided by twenty. This typically resulted in full-time workers earning more than casual or part-time workers. The new calculation –“the total amount of regular wages earned in the pay period immediately preceding the public holiday, divided by the number of days the employee worked in that pay period”—had the opposite result, leading to a significantly greater entitlement for casual and part-time employees.

This rollback went into effect on July 1, 2018 and will remain in effect until December 31, 2019.

Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.

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