For some Canadian workers, holidays are meant for relaxation and spending time with family. But for others, they’re a time to earn a little extra income, thanks to holiday pay.
Across Canada, employees’ holiday pay varies from province to province. It depends on which days are considered holidays, how the employee is paid, and whether they qualify for holiday leave or premium pay.
If you employ full-time workers, part-time employees, or contractors in Ontario, you should understand your workers’ rights regarding holiday pay in Ontario. We’ll break down the fine print of holiday pay, from statutory holidays to eligibility, plus how to calculate holiday pay in Ontario.
An overview of paid holidays in Ontario
Holiday pay isn’t just a nice perk—it’s a legal requirement for hiring in Ontario. Under the Employment Standards Act (ESA), Ontario requires employers to close for business on specific public holidays (also known as statutory holidays) and still pay regular compensation.
The ESA covers all employees, including full-time, part-time, permanent, and term contract workers. Eligibility for holiday pay doesn’t depend on an employee’s tenure with a company. Even if a team member just started their role, the law protects everyone’s right to earn additional compensation.
Note that some industries (such as hospitality and medicine) have unique regulations and might be exempt. For businesses that do operate on statutory holidays, scheduled employees are eligible for premium pay, paid out at 1.5 times their regular wages (aka time-and-a-half) for each hour they work.
The most important public holidays in Ontario
Qualifying employees are entitled to the day off or work with premium pay on statutory holidays. So, how many stat holidays in Ontario are eligible for holiday pay? Ontario observes nine public holidays:
- New Year’s Day (January 1)
- Family Day (third Monday in February)
- Good Friday (Friday before Easter Monday)
- Victoria Day (Monday preceding May 25)
- Canada Day (July 1)
- Labour Day (first Monday in September)
- Thanksgiving Day (second Monday in October)
- Christmas Day (December 25)
- Boxing Day (December 26)
Although they aren’t statutory holidays in Ontario, some businesses might close and offer holiday pay to employees on the following days:
- Easter Monday (Monday after Easter Sunday)
- Civic Holiday (first Monday in August)
- National Day for Truth and Reconciliation (September 30)
- Remembrance Day (November 11)
Who is eligible for holiday pay in Ontario?
Most employees in Ontario are covered by the ESA, making them eligible for public holiday pay. Employers in exempt industries should consult the Ontario government website or talk to a payroll professional or labor attorney about local employment laws to determine how statutory holiday pay rules in Ontario apply to their employees.
For industries that aren’t exempt, employees must generally follow the “last and first” rule to be eligible. To qualify for holiday pay, these employees must work their last regularly scheduled shift before the holiday and their first regularly scheduled shift following the holiday. Exemptions apply for reasonable cause, like parental leave or bereavement.
For example, imagine an employee who wants to receive holiday pay for Victoria Day. To receive holiday pay, they must work the Friday shift before Victoria Day and the Tuesday shift after the holiday. Employees who miss either of those shifts without a valid reason won’t qualify for holiday pay.
How to calculate statutory holiday pay in Ontario
In Ontario, statutory holiday pay is the average wages earned in the four weeks prior to the holiday. This calculation includes both regular wages and vacation pay.
Sound confusing? Let’s work it out.
1. Calculate the total wages
Add up all the wages earned during the four weeks before the public holiday. Regular wages don’t include:
- Overtime pay
- Vacation pay
- Public holiday pay
- Premium pay
- Termination pay or severance
- Domestic or sexual violence leave pay
2. Add vacation pay
Vacation pay is an entitlement that represents a percentage of an employee’s gross wages. In Ontario, employers must offer vacation pay at a rate of at least 6% of total wages, depending on their tenure. Add the vacation pay payable to the total wages earned during the same four-week period.
3. Calculate the average daily earnings
To determine the holiday pay, add together an employee’s regular wages over the four weeks and the vacation pay payable from that period, then divide the total by 20.
For example, imagine an employee who works 20 hours each week at $25 an hour and 4% vacation pay:
- 20 hours per week x $25 per hour = $500 wages earned per week
- $500 x 4 weeks = $2,000 total wages
- 4% vacation pay of $2,000 = $80
- Total earnings for the four-week period = $2,000 + $80 = $2,080
- Average earning by day = $2,080 ÷ 20 = $104
This employee would receive $104 in holiday pay for a public holiday.
Simplify holiday pay for global employees with Oyster
Managing a distributed team brings numerous challenges, from coordinating meetings across time zones to building a close-knit team despite physical distance. Holiday pay shouldn’t add stress—even if it’s complicated.
Oyster’s Global Payroll platform simplifies the process by automatically setting up holiday pay calculations and ensuring compliance with local regulations, whether you’re hiring in Canada or elsewhere.
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FAQs
Do you still have questions about paid time off in Ontario? Here are answers to some common queries:
Are independent contractors eligible for holiday pay in Ontario?
No. In Ontario, an independent contractor is considered a self-employed individual or entity who provides services to clients under a contract. The ESA doesn’t apply to independent contractors.
Although independent contractors aren’t eligible for holiday pay under the ESA, they can stipulate extra income in their contracts. For example, an independent graphic designer might charge double pay to respond to queries on a public holiday.
What is substitute holiday pay?
If an employee is scheduled to work on a public holiday, they’re entitled to either premium pay or a substitute day to replace the public holiday. Likewise, if a public holiday falls on a day your employee already has off, a substitute weekday must be chosen, and the employee is eligible to receive holiday pay.
Substitute holiday pay is calculated the same way as a paid public holiday. Typically, substitute holidays are scheduled within three months following the public holiday and must be agreed upon before the public holiday.
What is premium pay, and how is it calculated?
Employees entitled to premium pay for working on a public holiday are paid 1.5 times their regular hourly wage.
About Oyster
Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. Oyster lets growing companies give valued international team members the experience they deserve, without the usual headaches and expense.
Oyster enables hiring anywhere in the world—with reliable, compliant payroll, and great local benefits and perks.
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