How is statutory holiday pay calculated in Ontario?

Ontario’s nine public holidays

Ontario recognizes nine public holidays under the ESA: New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Christmas Day, and Boxing Day. Each one triggers the same public holiday pay rules for eligible employees, regardless of whether the business is open or closed that day.

Employers who operate on a holiday, such as restaurants and retailers, still owe the same public holiday pay calculation to eligible staff who do not work that day, and owe premium pay on top of it to those who do. Businesses in restaurants and retail tend to run into this most often, since staffing over a holiday is common in those industries.

Some federally regulated workplaces and specific sectors follow a different set of public holiday rules, but the vast majority of Ontario employers covered by the ESA follow the nine-holiday list and the calculation described here. Confirm which set of rules applies if your business operates in a federally regulated sector such as banking or interprovincial transportation, since the ESA holiday list does not automatically apply there.

The public holiday pay formula

The ESA formula for public holiday pay is total regular wages earned, plus vacation pay earned, in the four work weeks before the holiday, divided by 20. This is designed to reflect an average day’s pay for that employee rather than assuming everyone works a flat, identical schedule. An employee whose hours vary week to week, or who works part-time, gets a holiday pay amount proportional to what they actually earned in the weeks leading up to it.

This averaging approach means holiday pay is not simply a day’s regular wage multiplied by their hourly rate; it is built from actual recent earnings. A part-time employee who worked very few hours in the four weeks before the holiday will receive a smaller holiday pay amount than a full-time employee working the same job, which follows directly from the formula rather than being a separate rule for part-timers.

A quick illustration: an employee who earned $1,600 in regular wages and $80 in vacation pay across the four work weeks before a holiday has a combined total of $1,680, which divided by 20 gives $84 in public holiday pay for that day. Change the inputs, whether through overtime, a raise partway through the period, or fewer scheduled shifts, and the $84 figure moves with it, since the formula always looks backward at what was actually earned rather than forward at a fixed rate.

Premium pay when an employee works the holiday

An employee who works on a public holiday is generally entitled to premium pay, meaning 1.5 times their regular rate for every hour actually worked that day, on top of receiving public holiday pay for the day itself. As an alternative to receiving both, the employer and employee can agree the employee instead takes a substitute day off with public holiday pay for that substitute day, plus premium pay for hours worked on the original holiday.

Employers should decide and document up front which approach they use for staff who regularly work holidays, since defaulting to whichever seems simpler at the time can create inconsistency between employees doing the same kind of work. Payroll software generally supports both models, but only if it is configured for the one the employer has actually chosen.

Premium pay applies to the hours actually worked on the holiday, calculated at 1.5 times the employee’s regular rate rather than their public holiday pay rate, which are two different numbers that sometimes get confused. A payroll run that mixes these two rates up will either overpay or underpay the employee for that day, so it is worth spot-checking a holiday pay run against the formula manually the first few times a new payroll setup handles one.

The eligibility rule that catches employers off guard

Ontario’s ESA includes what is often called the first-and-last rule: an employee can lose entitlement to public holiday pay if, without reasonable cause, they fail to work all of their last regularly scheduled day of work before the holiday and all of their first regularly scheduled day of work after it. An employee who is scheduled to work both of those days and does so without a valid reason for missing part of either one keeps their entitlement; one who no-shows either day without cause can lose it.

• The rule looks at scheduled days, not the calendar days immediately before and after the holiday.
• Reasonable cause, such as a documented illness, does not disqualify the employee from holiday pay.
• Employers should apply this rule consistently and document the reason whenever holiday pay is withheld under it.

Employees with irregular or on-call schedules add a further wrinkle, since the ESA also allows an averaging agreement in some circumstances where a fixed work schedule does not really exist. This is a narrower and more technical situation than the standard formula covers, so it is worth confirming the correct approach for a specific irregular-hours role rather than assuming the default calculation automatically fits every scheduling pattern.

How we make sure this is set up correctly in payroll

We configure payroll software with the correct four-week lookback window, the right definition of wages for the calculation, and the employer’s chosen approach to premium pay versus substitute days, rather than relying on a generic default setting. Getting the formula wrong tends to understate holiday pay for employees with variable schedules specifically, which is exactly the group the formula was designed to protect. Our payroll services include this as a standard part of setup, alongside the related vacation pay rules that use a similar wage-based calculation.