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ESA Update: Ontario Government to Temporarily Reinstate Pre-Bill 148 Public Holiday Pay Formula Effective July 1, 2018

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As you are aware, Bill 148 made substantial changes to the Employment Standards Act, 2000 (“ESA”) that took effect on January 1, 2018.  Among those changes was a new formula for calculating public holiday pay.  This new formula required employers to calculate public holiday pay based on the regular wages earned in the pay period before the public holiday, divided by the number of days the employee worked in that pay period.

In a surprising turn of events, the Ontario government announced on May 7, 2018 that it will be reviewing the public holiday provisions of the ESA. The Ministry of Labour will conduct this review in 2018 and interested parties can provide submissions on the Public Holiday Pay Review to exemptions.review@ontario.ca.

More surprising—the government has also enacted a new regulation, Ontario Regulation 375/18, which reinstates, on an interim basis, the old public holiday pay formula for all employers.  As a result, effective July 1, 2018, public holiday pay will be calculated under the old public holiday pay formula as follows:

Public holiday pay is equal to the total amount of the regular wages and vacation pay earned in the 4 weeks before the work week in which the public holiday occurred, divided by 20.

Ontario Regulation 375/18 is a temporary measure while the Public Holiday Pay Review occurs, which means the public holiday pay formula could change again after the Public Holiday Pay Review is complete.

To read Ontario Regulation 375/18, click here: https://www.ontario.ca/laws/regulation/r18375.

For employers who have updated their public holiday policies to reflect the new formula under Bill 148, you will need to revisit these updated policies (or simply revert to your old public holiday policies) in preparation for July 1, 2018. Additionally, employers who have implemented the new public holiday pay formula into their human resources information systems or payroll systems will need to ensure these systems are changed back to the old public holiday pay formula come July 1, 2018.

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