Statutory holidays - or “long weekends” - as many Canadians refer to them, are widely enjoyed but often misunderstood by employees who aren’t clear on which holidays are paid and when. Most workers are entitled to have these days off as most Canadian businesses are closed on statutory holidays. This is commonly a paid day off, for which employees receive what is called “stat holiday pay.” For payroll administrators, it is important to be aware of both provincial and federal statutory holidays and how employees are compensated for them.
In this article, we will examine what statutory pay is, how to calculate it, how employees qualify for it if your business is closed for the holiday, or if in fact, your business is open on the holiday and your employees are working, then how to calculate their statutory pay.
Table of Contents
- What is a statutory holiday?
- What is statutory holiday pay?
- Working on statutory holidays
- Qualifying for holiday pay
- How to calculate statutory holiday pay for hourly employees
- How to calculate statutory holiday pay for salaried employees
- Statutory pay regulations by province
- Frequently asked questions
What is a statutory holiday?
A statutory holiday, also known as a ‘stat,’ ‘general,’ or ‘public’ holiday in Canada, is legislated through either the federal, provincial, or territorial government and honours a variety of cultural, national, or religious dates. Most employees, in both the public and private sectors, are entitled to take the day off and receive their regular pay.
What is statutory holiday pay?
In Canada, workers who are entitled to have statutory days off will receive a percentage of their wages earned over a 4-week period. Employees who are required to work on a statutory holiday because their business is operational and/or deemed as an essential service on that day typically earn 1.5 times their regular rate.
Working on statutory holidays
If you require your employees to work on a statutory holiday due to your business being open (you operate a gas station) or your business is deemed essential (you manage a team of paramedics), it is up to the individual employee to decide how they want to be compensated for working the holiday. There are two options an employee can choose:
- For every hour worked, the employee is entitled to statutory holiday pay, plus what is called ‘premium pay’ for every hour worked. Premium pay is 1.5 times the employee’s regular pay, meaning they must be paid 1.5 times their regular pay rate for every hour worked. This gives the employee their regular hourly rate, plus 50% more per hour of their regular hourly rate for each hour of their regular shift. This is commonly known as “time-and-a-half.”
- The second option is for an employee to receive their regular pay for working the holiday and then take a different day off with holiday pay. For example, if the holiday falls on a Monday, the employee works that day at their regular rate and then opts to take the Friday of that week off instead.
Qualifying for holiday pay
In Canada, most employees qualify for and are entitled to statutory pay; however, there are some exceptions to the rule.
In Ontario, what is commonly referred to as the “Last and First Rule”, employees will qualify for statutory pay if they work their entire, regularly scheduled shift before and after the holiday. There is a clause, however, that if for instance, an employee was scheduled to work on a Sunday and was absent that day with no valid reason, they will not qualify for statutory pay if they are scheduled and do indeed come in to work on the holiday that will fall on Monday.
If an employee who was scheduled to work on a Sunday and was absent for a legitimate reason such as injury or illness and is able to recover and get back to work on their regularly scheduled shift on the holiday falling on Monday, they are, in fact, entitled to holiday pay for that day.
The same principle applies to an employee’s first day back to work following a statutory holiday. If an employee is scheduled to work on a holiday and misses their shift the day after the holiday without just reason, they are not entitled to their statutory pay.
It is important for employers and their payroll staff to note that the first and last regularly scheduled days of work before or after a statutory holiday do not have to be the days right before and right after the holiday. They are, as stated, the employee’s first and last “regularly scheduled” day of work.
According to the Ontario Ministry of Labour, as long as an employee works all of their first and last regularly scheduled shift before or after the holiday, or has reasonable cause for not working either of those days, they meet the qualifying criteria for statutory holiday pay. Rules for statutory holidays are available from the Government of Canada.
How to calculate statutory holiday pay for hourly employees
As previously mentioned in this article, workers who are entitled to have a statutory holiday will receive a percentage of their wages earned over a 4-week period.
This example outlines the process:
An employee has worked 160 hours over 20 days in the last four weeks. Divide 160 hours by 20, which gives you 8. This means you must pay your employee for 8 hours on the next stat holiday.
Remember, statutory holidays qualify for 1.5 times the employee’s regular hourly wage. Therefore, an employee who usually makes $20 an hour qualifies to make $30 an hour on the statutory holiday if they work that day.
Another point of interest is that statutory pay applies to both full-time and part-time employees. For part-time workers, the statutory holiday pay is adjusted to the number of hours worked.
How to calculate statutory holiday pay for salaried employees
When it comes to calculating statutory pay, the principle is the same for hourly employees as it is for salaried employees. To calculate this, add the employee’s regular salary earned in the four weeks prior to the public holiday, including all the vacation pay earned over the four-week period prior to the statutory holiday, and divide by 20 (four weeks). This is the amount the employee is entitled to be paid for the statutory holiday.
It is important for your payroll administrator to consider that vacation pay depends on whether the employee took a vacation in the four weeks before the public holiday and which of three ways it is accounted for:
- Option 1 - the employee gets paid vacation pay on every cheque. If this is the case, the statutory pay calculation will be at least 4% of the employee’s wages earned during the four-week period leading up to the public holiday.
- Option 2 – the employee banks their vacation pay and gets paid a lump sum on a specific day. This is included in the statutory pay calculation only if the lump sum payment date falls within the four weeks leading up to the statutory holiday.
- Option 3 - vacation pay is included in the statutory pay calculation only if the employee went on vacation during the four weeks before the statutory holiday.
Statutory holiday pay regulations by province
Every province and territory defines its own regulations when it comes to statutory pay. The following links indicate what qualifies as a statutory holiday in each province and territory from east to west:
Newfoundland and Labrador
Prince Edward Island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Yukon
Northwest Territories
Nunavut
You may wonder why some stores are open on a statutory holiday when banks, government offices, and transportation services are not operational or are running on a limited schedule. Each province and territory is unique in its holiday operating regulations as broken down by the Retail Council of Canada.
Regardless of where your business is or where you work to manage staff or administer payroll in Canada, it’s crucial to ensure that you understand the rules and regulations for statutory pay in your province or territory. Better yet, use payroll software to run a payroll that adheres to compliance rules. A holiday from work is better for everyone when it’s acknowledged properly by way of remuneration.
Frequently asked questions
What is statutory pay? Is it the same as premium pay?
Yes, both statutory pay and premium pay amount to 1.5 times an employee’s regular rate of pay for every hour worked on what is deemed as a public holiday in their province or territory of residence.
What are substitute holidays?
A substitute holiday is designated to replace a public holiday, typically when the public holiday coincides with an employee’s vacation period. The substitute holiday must be taken within three months of the original public holiday.
What are statutory pay rules for industries that are open on holidays?
Industries such as hospitality (hotels, motels, tourist resorts, restaurants, and taverns) and essential services (hospitals, nursing homes, and emergency services) have unique regulations concerning statutory holidays in their respective provinces and territories. The government regulations in each area determine how employees in these industries are compensated if they are required to work on a statutory holiday.
What if a statutory holiday falls on an employee’s scheduled day off?
In this case, a day off with pay may be added to the employee’s annual vacation or taken at another mutually convenient time.
What if a statutory holiday falls on a weekend?
If a statutory holiday falls on a Sunday, Saturday, or other non-working day for an employee, the employee is entitled to a holiday with pay on the working day immediately preceding or following the general holiday.
What if a statutory holiday falls on an employee’s day off?
According to the Government of Canada, if a holiday falls on your day of rest, the holiday is moved to your first scheduled working day following the day of rest. In other words, you are entitled to another day off with pay.
Does the three-hour rule apply to stat pay?
The three-hour rule is the regulation that an employee must be paid the equivalent of three hours of work at their usual rate, even if their shift is cut short (a restaurant isn’t busy, so an employee is sent home before their usual, eight-hour shift ends). In this case, statutory pay does apply, and the employee will be paid three hours at the statutory pay (time-and-a-half) rate.
Learn More
Are you worried about statutory pay calculations? At ADP, we understand these can be time-consuming and prone to error. This is why we offer payroll solutions that take care of your employees’ pay so you can focus on other areas of your business. Call 866-622-8153 and chat with our sales team to find the best solution for your business, or start a quote.
This guide is intended to be used as a starting point in analyzing statutory pay and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.