Throughout the year, working Canadians get to enjoy statutory holidays. Most Canadian employees are entitled to take these days off and receive statutory holidays or stat pay. Running payroll means you need to be aware of provincial and federal stat holidays.

Though calculating holiday pay for the first time can be overwhelming, it's easier to calculate than it seems. This article provides an overview of what stat pay is, how employees qualify for it, and how employers can calculate stat pay for their employees.

Working on Statutory Holidays

Your employees get to decide how they want to be compensated for working a holiday. They can opt for one of the following methods of compensation:

1. Statutory holiday pay plus premium pay* for every hour worked. This option allows an employee who regularly earns $15 an hour to receive $22.50 an hour plus holiday pay for working an 8-hour shift on a holiday.
2. Alternatively, they can receive regular pay for working the holiday and take a different day off with holiday pay. To continue with the above example, the worker could receive $15 per hour for working the holiday. Then the worker could take off another day in the week and receive their holiday pay for that day.

*Premium pay is 1½ times the employee’s regular pay, meaning that if the employee works on a public holiday, they must be paid 1½ times their regular pay rate for every hour they work.

Once your employee has chosen between these options, you must get their agreement in writing. There are, however, exceptions for the hospitality industry (resorts, restaurants, hotels, etc.), hospitals, and nursing homes. If your business falls within the previously mentioned industries, and you normally operate during the holidays, you do not need to receive a written agreement from your employees. This exception to the rule also applies to businesses in continuous operation, such as oil refineries, alarm-monitoring stations, and casinos.

Qualifying for Holiday Pay

In Ontario, you typically have to pay all your employees stat pay, but there are a few exceptions. 

Employees qualify for stat pay if they work the entirety of their regularly scheduled shift before and after the holiday unless they have reasonable cause for not working all or part of their scheduled shift– this is known as the ‘First and Last Rule.’

To better understand how this works, imagine a statutory holiday falls on a Friday, and your employee doesn’t show up for work on Thursday. If they don’t have reasonable cause to miss the day of work, they forfeit their right to holiday pay for Friday. However, if your employee scheduled a vacation day, took a personal day, or arranged to have Thursday off for another reason, they are still entitled to holiday pay.

This same rule applies to the employee’s first day back after the holiday.

Similarly, if your employee is supposed to work on a holiday and skip their shift without reasonable cause, they also forfeit their holiday pay. For example, say your employee agreed to work on a statutory holiday. They work two hours, but then they leave for no reason. In this case, you still have to pay them premium pay (time and a half) for the two hours worked, but you don’t have to pay them the rest of their holiday pay.

How to Calculate Stat Pay for Employees

Now that you know what stat pay is and how employees qualify for it, you may ask yourself: how is holiday pay calculated?

To determine the amount you must pay your employees for a stat holiday, you’ll add up all their regular pay, vacation pay, and stat pay (if any) for the four-week period preceding the stat holiday. Divide this by the number of days worked during those four weeks (typically 20 days) to determine the employee’s stat pay.

You will also need to determine their stat pay hours.  To do this, follow this simple formula:

Stat pay hours = hours worked in the previous four weeks  

 ÷

days worked in the previous four weeks.

Consider the following examples:

Let’s say you have a full-time employee who has worked 160 hours over 20 days during the last four weeks. When you divide 160 hours by 20, the result is eight. That means you must pay your employee for eight hours on the next holiday. 

Now, imagine you have an employee who works half days. They worked 80 hours over 20 days in the last four-week period. Again, you divide 80 by 20, and since the result is four, you pay that employee for four hours on the next holiday.

Now, here’s where things get interesting. Say you have an employee who works every Saturday and Wednesday. During the last four-week period, they logged 64 hours over eight days. When you divide 64 hours by eight days, the result is eight, and you have to pay this employee for eight hours on the next holiday. Even though they work fewer hours than the other part-time employee, they get a full day of pay. 

Learn more about the differences between full-time and part-time wages here.

How to Calculate Vacation Pay for Salaried Employees

When calculating stat pay, you must determine your employee’s vacation pay in addition to their regular wages. As an employer in Canada, you are legally obligated to provide employees vacation time and pay for it. Vacation pay will depend on whether or not the employee went on vacation in the four weeks before the week of the public holiday and how you choose to pay for vacation time. 

There are three ways to pay your employees’ vacation pay:

1. The employee gets paid vacation pay on every cheque
2. The employee banks their vacation pay and gets paid a lump sum on a specific day
3. The employee banks their vacation pay and is paid when they take vacation time

For option 1, the vacation pay included in the stat pay calculation will be at least 4% of the employees’ wages earned during the four-week period leading up to the public holiday (you may also choose to give your employees more than 4%). 

For option 2, vacation pay is included in the stat pay calculation only if the lump sum payment date falls within the four-weeks leading up to the public holiday.

For option 3, vacation pay is included in the stat pay calculation only if the employee went on vacation during the four weeks before the stat holiday.

Statutory Holiday Pay Regulations by Province

Every province has its own rules and regulations when it comes to stat pay. To make things easy, this table provides a detailed overview of the different regulations and recognized holidays.

Statutory Holiday Business Closures by Province

Every province has different requirements and expectations regarding statutory holiday business closures. Business closures depend on where your business is located, your business type, and the holiday in question. 

Criteria for business closures in Canada by province are as follows:

• Ontario: Most retailers may not be open on most statutory holidays except Boxing Day. Small book or magazine stores, pharmacies, flower shops, and gas stations are exempt from this regulation.
• Alberta: Most businesses remain open with reduced hours.
• Quebec: The majority of retail stores are not open on statutory holidays, except on Victoria Day and Thanksgiving Day. There are exemptions for small retailers such as grocery stores, pharmacies, and restaurants.
• New Brunswick: Most retailers must be closed on Sundays and all statutory holidays, including Victoria Day, New Brunswick Day, Thanksgiving Day, and Boxing Day. Exceptions include emergency services, places of worship, manufacturing industries, pharmacies, and small convenience stores.
• Nova Scotia: Most retail businesses are not open on recognized stat holidays, including Nova Scotia Heritage Day, Easter Sunday, Remembrance Day, Thanksgiving Day, and Boxing Day. Small stores, such as convenience stores and pharmacies, are permitted to be open during certain hours.
• British Columbia: Most businesses remain open with reduced hours of operation. 
• Manitoba: Only the following types of business may be open (with reduced hours):
• Businesses with fewer than four employees
• Some retail stores
• Pharmacies
• Rental, repair and service shops
• Restaurants
• Places for educational or recreational amusement
• Tourism and recreational businesses
• Newfoundland and Labrador: Most retailers are not open on recognized statutory days, including Easter Sunday, Victoria Day, Thanksgiving Day, Boxing Day, and Regatta Day. There are exemptions for convenience stores, restaurants, book stores, and pharmacies.
• Saskatchewan: Most businesses remain open with reduced hours of operation.
• Prince Edward Island: Most retailers are not permitted to be open during most statutory holidays, including Islander Day, Thanksgiving Day, and Boxing Day. Exemptions include restaurants, gas stations, pharmacies, convenience stores, tourist facilities, and similar operations.
• Northwest Territories: Most businesses remain open with reduced hours.
• Yukon: Most businesses remain open with reduced hours.
• Nunavut: Most businesses remain open with reduced hours.

It’s crucial to ensure that you understand the rules and regulations for stat pay in your province, or have a financial professional in your corner to help. Whether your business is open or closed for these holidays, you must pay your employees. And if your employees come in for the day, you have to offer them the choice between premium pay or an extra day off with holiday pay. 

QuickBooks is here to help you organize your payroll process so you’ll always be inline with any provincial or federal regulation. Ensure your employees are always paid the correct stat pay on time with QuickBooks Online Payroll.