Holiday pay requirements for temp agencies

Who's responsible for holiday pay?

Brian Johnston
Question: Are temp agencies exempt from paying employees statutory holiday pay? Our agency uses month-to-month contracts without any specifications for this.

Answer: Employment standards legislation does not exempt temp agencies from paying statutory holiday pay.

Whether it is the temp agency or the contracting company which may be considered the employer in the circumstances and obliged to pay the statutory holiday pay is what needs to be determined. That assessment involves a consideration of who hires, supervises, pays and directs the work of the employee, the reporting relationship and the duration of the work term. Agencies that supply temporary personnel have been found to be employers for employment standards purposes (see Re Coenaert and Eaton Yale Ltd. (c.o.b. Commander Electrical Equipment)).

Prior to 2001, employees in Ontario who were employed less than three months were not entitled to holiday pay. Some may say a temp agency that uses month to month contracts, without holiday pay, may have been able to operate appropriately under the Ontario Employment Standards Act. However, the more recent amendment to that Act does not provide for the same exemption. Now the qualifications for holiday pay are merely that the employee must work the regularly scheduled day before and after the holiday, and be at work on the public holiday if the employee agreed to do so.

There are other exemptions which provide that certain employees are not eligible for holiday pay. Ontario Regulation 285/01 states that the holiday pay section does not apply to “a person who is employed under an arrangement whereby he or she may elect to work or not when requested to do so.” In Allan Slater v. Labour Ready Temporary Services Ltd., the focus of the inquiry was “whether the facts establish that the employee has complete discretion whether to work or not.” In that instance, the employee had the discretion whether to work or not and accordingly was not entitled to holiday pay.

Therefore, temp agencies are not exempt from paying employees statutory holiday pay. Month-to-month contracts by and of themselves would not likely save them from such obligation.

For more information see:

Re Coenaert [1992] O.E.S.A.D. No. 227 (Ont. Ministry of Labour).
Eaton Yale Ltd. (c.o.b. Commander Electrical Equipment) [1998] O.E.S.A.D. No. 234 (Ont. Lab. Rel. Bd.).
Allan Slater v. Labour Ready Temporary Services Ltd. [2006] O.L.R.B. 4060-05-ES (Ont. Lab. Rel. Bd.).

Brian Johnston is a partner with Stewart McKelvey Stirling Scales in Halifax. He can be reached at (902) 420-3374 or [email protected].

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