How holiday pay is regulated in Canada
Question: How is holiday pay regulated for Canadian employees? If an employee works on a holiday, what is the minimum requirement for payment on top of regular pay?
Answer: Holiday pay is regulated by employment/labour standards legislation and regulations in each province and territory as well as in the federal jurisdiction. Employment standards legislation sets out minimum standards. If an employee’s employment is governed by a collective agreement or written employment contract, the minimum requirements for holiday pay will be dictated by that agreement provided they meet or exceed the standards set out in the legislation.
While it is possible to contract for greater benefits than those set out in the legislation, it is not possible to enter into a contract or collective agreement that provides a lesser benefit. Where greater benefits are provided for under a collective agreement or employment contract, those holiday pay entitlements will determine the minimum requirement for payment.
Assuming there is no agreement between employer and employee governing holiday pay, it is necessary to determine what legislation applies to the particular employment. Work performed within a province may be regulated by the provincial legislation in force in that province or it may be regulated by the Canada Labour Code and the applicable minimum standards set out in that legislation.
Once the applicable legislation is identified, the next step in ascertaining the minimum entitlement is to examine the legislation to ensure the particular employment is not exempt from the holiday pay requirements or covered by provisions dedicated to that type of employment. Legislation and regulations often contain special provisions applying to workers in continuous operations such as hospitals, restaurants and hotels and to salespersons, construction employees, film extras and domestic service employees. Legislation may also permit substitution of another holiday for a particular general holiday under certain conditions (see, for example, Canada Labour Code, s. 195; Manitoba Employment Standards Code, s. 28). Where such an arrangement is in place, working on the original holiday may produce no additional pay entitlement. Assuming the work performed on the holiday is governed by the general provisions of the legislation, the entitlement will typically differ depending whether the holiday was a normal work day for the employee or not. For example, under Alberta’s Employment Standards Code, when the holiday falls on a normal work day for the employee, the employee is entitled to 1.5 times her “wage rate” for each hour worked on top of “an amount that is at least the average daily wage of the employee” or provide a day off with pay equal to at least the employee’s average daily rate. If the holiday worked is not a normal work day, the employee is entitled to at least 1.5 times her “wage rate” for each hour worked. Although a premium equal to “time and a half” on top of regular pay is common, the applicable statute should be examined.
Finally, it is necessary to determine what amounts are included in the rate which serves as the basis of the holiday premium calculation.
In Alberta, the premium is one and one-half times the “wage rate.” The “wage rate” is defined as “the hourly rate of pay for wages.” In turn, “wages” is defined as including “salary, pay, money paid for time off instead of overtime pay, commission or remuneration for work, however calculated” but excludes overtime pay, vacation pay, general holiday pay and termination pay; discretionary gifts or bonuses; expenses or expense allowances; and tips or other gratuities. Where a particular employee works on commission or on some other basis that does not have a normal hourly wage, the legislation or regulations may specify how the premium is to be calculated. In some jurisdictions, a percentage of total wages for a specified period may be used. In others, the calculation may be based on minimum wage.
As the statutory provisions are significantly different from province to province, it is essential that any question of exact holiday pay entitlement be addressed in the context of the particular legislation applicable and the individual circumstances of the claimant.
Tim Mitchell is a partner with Laird Armstrong in Calgary who practices employment and labour law. He can be reached at [email protected] or (403) 233-0050.
Answer: Holiday pay is regulated by employment/labour standards legislation and regulations in each province and territory as well as in the federal jurisdiction. Employment standards legislation sets out minimum standards. If an employee’s employment is governed by a collective agreement or written employment contract, the minimum requirements for holiday pay will be dictated by that agreement provided they meet or exceed the standards set out in the legislation.
While it is possible to contract for greater benefits than those set out in the legislation, it is not possible to enter into a contract or collective agreement that provides a lesser benefit. Where greater benefits are provided for under a collective agreement or employment contract, those holiday pay entitlements will determine the minimum requirement for payment.
Assuming there is no agreement between employer and employee governing holiday pay, it is necessary to determine what legislation applies to the particular employment. Work performed within a province may be regulated by the provincial legislation in force in that province or it may be regulated by the Canada Labour Code and the applicable minimum standards set out in that legislation.
Once the applicable legislation is identified, the next step in ascertaining the minimum entitlement is to examine the legislation to ensure the particular employment is not exempt from the holiday pay requirements or covered by provisions dedicated to that type of employment. Legislation and regulations often contain special provisions applying to workers in continuous operations such as hospitals, restaurants and hotels and to salespersons, construction employees, film extras and domestic service employees. Legislation may also permit substitution of another holiday for a particular general holiday under certain conditions (see, for example, Canada Labour Code, s. 195; Manitoba Employment Standards Code, s. 28). Where such an arrangement is in place, working on the original holiday may produce no additional pay entitlement. Assuming the work performed on the holiday is governed by the general provisions of the legislation, the entitlement will typically differ depending whether the holiday was a normal work day for the employee or not. For example, under Alberta’s Employment Standards Code, when the holiday falls on a normal work day for the employee, the employee is entitled to 1.5 times her “wage rate” for each hour worked on top of “an amount that is at least the average daily wage of the employee” or provide a day off with pay equal to at least the employee’s average daily rate. If the holiday worked is not a normal work day, the employee is entitled to at least 1.5 times her “wage rate” for each hour worked. Although a premium equal to “time and a half” on top of regular pay is common, the applicable statute should be examined.
Finally, it is necessary to determine what amounts are included in the rate which serves as the basis of the holiday premium calculation.
In Alberta, the premium is one and one-half times the “wage rate.” The “wage rate” is defined as “the hourly rate of pay for wages.” In turn, “wages” is defined as including “salary, pay, money paid for time off instead of overtime pay, commission or remuneration for work, however calculated” but excludes overtime pay, vacation pay, general holiday pay and termination pay; discretionary gifts or bonuses; expenses or expense allowances; and tips or other gratuities. Where a particular employee works on commission or on some other basis that does not have a normal hourly wage, the legislation or regulations may specify how the premium is to be calculated. In some jurisdictions, a percentage of total wages for a specified period may be used. In others, the calculation may be based on minimum wage.
As the statutory provisions are significantly different from province to province, it is essential that any question of exact holiday pay entitlement be addressed in the context of the particular legislation applicable and the individual circumstances of the claimant.
Tim Mitchell is a partner with Laird Armstrong in Calgary who practices employment and labour law. He can be reached at [email protected] or (403) 233-0050.