‘Do employers have to pay holiday pay after the employment relationship has been severed?’
By Alan McEwen
Every once and a while I get asked a question something like this: “One of our employees just (quit, was terminated) and a statutory holiday is coming up. Do we have to pay statutory holiday pay after the employment relationship has been severed?’
While it might seem odd, in almost all employment standard jurisdictions, there is no actual requirement that a person be an employee on the day recognized as a statutory holiday. The only exception is federally regulated employment under the Canada Labour Code. To qualify for statutory holiday pay, in federally regulated employment, the statutory holiday has to fall within an actual period of employment.
By contrast, for example, in Ontario, statutory holiday pay requirements apply to persons who are no longer employees. The primary reason for this is that the term employee in the Ontario Employment Standards Act, 2000, includes “a person who was an employee.” This means, quite literally, when reading the Ontario statutory holiday requirements you have to read a reference to “employee” as if it read “current or former employee.”
More broadly, saying that a person has to be an employee on the day of a statutory holiday (except as noted above under the Canada Labour Code), is the same as saying that by quitting, or being terminated, a person no longer has the protection of the applicable employment standards. Such an understanding might make it difficult for employees to file claims for wages in lieu of notice when they have been terminated without cause.
Another common objection to statutory holiday pay, specifically in Ontario, is that employees lose the right to statutory holiday pay in any of the following circumstances:
•they fail to work, without reasonable cause, the closest regularly scheduled work day on either side of the holiday; or
•they fail to work, without reasonable cause, on the statutory holiday when agreed with, or in a continuous operation as required by, the employer.
However, these two conditions are often misread. Note, the emphasis is on failing to work and doing so without reasonable cause. These conditions don’t mean a former employee has to actually work either the statutory holiday itself or the closest working day on either side, in order to maintain the right to statutory holiday pay.
Instead, the first of these bullets means employees lose this entitlement if both the following conditions are true:
•they fail to work the closest regularly scheduled day on either side of the holiday; and
•they don’t have reasonable cause for this failure.
It seems a fair assumption that a person terminated before a holiday, with or without cause, can’t have a regularly scheduled day after that termination. Even if this weren’t true, being terminated would certainly qualify as reasonable cause for not working the next applicable day. And I don’t see much difference for a person who quits or otherwise leaves work voluntarily. The state of “being scheduled to work” can only apply in the context of an employment relationship. However this ends, after its end, a person can’t be considered as being “scheduled to work.”
Similarly, an agreement to work a statutory holiday or, in certain industries, the employer’s right to require employees to work a statutory holiday, only exists in the context of an employment relationship. We don’t have personal servitude in Canada.
The right of Ontario employers, in a continuous industry, hospital, restaurant, hotel and so on to require employees to work simply vanishes once the employment relationship has ended, however and whenever it has ended. So employees can’t be seen as having failed to work on a statutory holiday as agreed or required.
The following example should help clarify situations where Ontario employees are eligible for statutory holiday pay, after the end of employment:
Barb’s workweek for an Ontario employee was a Sunday to Saturday calendar week. She is otherwise entitled to statutory holiday pay for Labour Day, Sept. 2, 2013. Barb quit, after having given reasonable notice and the end of the notice period was Saturday, Aug. 17. In the four workweeks prior to Labour Day, Barb’s wages for statutory holiday purposes totalled $2,500. Divided by 20, Barb is entitled to be paid $125 as statutory holiday pay for Sept. 2, 2013.
In other words, you have to apply the same statutory holiday rules to former employees as to current ones. In Ontario, this means a former employee, with wages earned in the four workweeks prior, will be entitled to statutory holiday pay on the same basis as current employees.
Alan McEwen is a Vancouver Island-based HRIS/Payroll consultant and freelance writer with over 20 years' experience in all aspects of the industry. He can be reached at firstname.lastname@example.org, (250) 228-5280 or visit www.alanrmcewen.com for more information.