How to calculate pay for non-statutory holidays in Canada
- Statutory holiday entitlements differ across the country.
- Employers who want to shut down for non-statutory holidays in their jurisdiction must consider legislation and common law to implement a shutdown in a legally compliant way.
- Employers must decide whether to pay their employees, require them to use vacation time, or not pay for the mandatory day off, with each differing depending on employee and workplace characteristics.
What are the statutory holidays in Canada?
Statutory holidays are paid days off work enjoyed by workers in every Canadian jurisdiction. There are only four days each year when every jurisdiction offers a paid holiday: New Year’s Day, Canada Day, Labour Day, and Christmas Day.
Family Day is a statutory holiday observed in British Columbia, Alberta, New Brunswick, Ontario, and Saskatchewan on the third Monday in February. That same date is called Heritage Day in Nova Scotia, Islander Day in Prince Edward Island, and Louis Riel Day in Manitoba.
All of Canada requires Good Friday, the Friday before Easter Sunday, as a statutory holiday, except Quebec, which lets employers choose either Good Friday or the Monday after Easter Sunday as a statutory holiday. Victoria Day and Thanksgiving are also statutory holidays everywhere except Atlantic Canada. New Brunswick is unique in this regard, with businesses being required to shut down for a day of rest on Victoria Day and Thanksgiving Day unless they are specifically exempt, but they are not required to pay employees statutory holiday pay for those days off work.
How to plan for a holiday shutdown
As you can see, not all Canadians can enjoy the same statutory holidays off work, and rules surrounding holidays vary across the country. For employers operating in several jurisdictions, differentiating entitlements for each workplace is crucial. As an employer, what happens if you want to shut down for a holiday that is not statutory? Each jurisdiction has its own rules, but all Canadian employers can plan for a shutdown by asking the right questions in preparation. You have several things to consider when making these decisions. Determining employee compensation on the non-legislated day off work is a common question we receive through our Live HR Advice service. To help with a planned non-statutory holiday closure, here are four ways of approaching compensation during non-statutory holidays.
Paying employees for non-statutory holidays
If you want to shut down on a non-statutory holiday, the simplest choice is to pay your employees as if it were a statutory holiday. This is not required under employment legislation, but it helps ensure employees are OK with being off work. If you provide pay at their regular rate, there is little reason for them to take issue with a day off. This is a great way to reward employees collectively, or you could position it as an employee wellness initiative by writing it into your health and wellness policies. One in five Canadians experiences mental illness in their lifetime. How can small and medium-sized organizations overcome stigma surrounding mental illness, and promote sound mental health among employees? Start with downloading our free guide to mental health in the workplace. Learn how to speak up about mental health at your workplace today.
If provisions exist in an employment contract that provide standardized pay across a set period, such as in some instances of salaried employees, employers are bound by that contract and must pay the employee that set amount whether they choose to shut down for a non-statutory holiday or not. Even in cases where employees are compensated above legislative requirements, such as providing wellness days or extra vacation time, some decisions can change the outcome for you as an employer.
Using vacation time for non-statutory days-off
Using Ontario as an example, workers who have been employed for at least 12 months are entitled to two weeks of vacation time and three weeks if they have been employed for at least five years. Vacation pay entitlements are calculated based on a percentage of earnings. This arrangement is similar in other jurisdictions, but regardless of where you do business, it’s important to consider that workers may have entitlements above legislative minimums written into their employment contracts. Our Ultimate Guide to HR and Compliance in Canada is a great place to start if you’re looking for up-to-date legislation and information on employee rights.
In most circumstances, you can choose when your employees take vacation time, such as to ensure operations continue without loss or to ensure the employee uses their entitlements before they expire. However, there are restrictions on employers requiring employees to take vacation time when the employer sees fit. Using Ontario’s Employment Standards Act, 2000 as an example, employers can dictate when an employee takes vacation, but it cannot be in periods of less than one week. This means that in Ontario, you could require employees to use vacation time to cover non-statutory holiday shutdowns, but unless the employee agrees in writing, that assigned vacation use must be no less than one week, covering the non-statutory holiday and sometime before or after it. This information can be communicated using a simple vacation assignment memo.
Not paying employees for non-statutory days off
Shutting down with little notice and not paying your employees is not a good idea, primarily because it erodes trust in the employment relationship and can lead to costly consequences if correct steps aren’t taken. However, if an annually occurring scheduled shutdown on a non-statutory holiday without pay is written into the employee’s contract, both you and any employees who agree to it are bound by the agreement, and no pay is required for that day.
If a shutdown without pay is not written into the employment contract, things can be more complicated. You could make a formal written request to your employees to shut down without pay, and if all employees who would be expected to work that day agree to it, then no further consideration is required. If you plan for these non-statutory shutdowns to occur annually, but employment contracts already exist, an agreement can be drafted to cover the provisions and requirements surrounding the time off each year. This way, you only need to receive consent from employees once. A great way to ensure everyone understands all requirements relating to time off is to implement a time off policy. Include information for unique situations and how they affect employees so there are no surprises if you want to mandate time off.
Scheduled shutdowns and temporary layoffs
When managing temporary layoffs, one of your most important considerations needs to happen when drafting the employment contract. Temporary layoffs implemented at your discretion should be expressly permitted in the employment contract to ensure these layoffs can be implemented without repercussions, such as having to deal with employee claims of constructive dismissal. If this topic is one you would like more information on, take a look at our blogpost, How to Avoid Constructive Dismissal Claims.
Constructive dismissal is defined as an employer making a significant change to a fundamental condition of employment without the employee’s consent. What counts as a significant change or fundamental condition of employment can vary, so you must be acutely aware of all aspects of the employment relationship. Even with these provisions included in the employment contract, employment legislation still applies, so you must be sure the provisions meet the legislative and jurisdictional requirements for temporary layoffs on non-statutory holidays.
You can use one of the methods described above to implement a scheduled shutdown if you want to close your business on a non-statutory holiday, but this can be tricky for employers who want to shut down with little notice and without pay for their staff. Every jurisdiction handles temporary layoffs differently, and other rules can also apply, such as the duration of the layoff. To learn how HRdownloads can help, book a free software demo with our HR experts. They’ll guide you through a no-commitment review of our policy templates and training courses at a time that’s convenient for you..
Best practices for shutting down for non-statutory holidays
Holidays in Canada are a chance to enjoy some rest and time away from work. With each jurisdiction experiencing different statutory holidays, employers may recognize the value of providing employees with time off above their statutory entitlements. Each jurisdiction has its own rules for holidays and time off, so review those legislative requirements, and decide to either pay, not pay, or require vacation time use from your employees for the time off. By communicating these expectations with them, you can provide employees with rest and relaxation, which both enriches their personal lives and lets them perform their best when they return to work.