How statutory pay calculations work

Devon from Wagepoint
Devon from Wagepoint
  • Updated

Please note that this article is for general information purposes only. The specific rules and regulations regarding statutory holiday pay are complex and vary by jurisdiction, so it is essential to consult the relevant Labour Program/Ministry of Labour for the applicable jurisdiction(s) to ensure compliance.

Daily wage method 

This method calculates statutory holiday pay for hourly employees by using their hourly rate multiplied by the assigned hours for the holiday. Statutory holidays are pre-loaded in the Company Settings based on the employee’s work location, and you can edit the number of assigned hours for each holiday.

Example:

Jessie’s regular hourly wage is $15 per hour and they work in Ontario. The Victoria Day holiday falls within the upcoming payroll’s pay period coverage dates. In the Company Settings for Statutory Holidays, 8 hours has been assigned to the Victoria Day holiday, which means that for the payroll run, the system will assign 8 hours and $120.00 to Jessie’s overall pay for the period using the Statutory Holiday income code to account for the holiday (8 hours x $15.00 per hour = $120.00).

If Jessie worked on the public holiday, their statutory holiday pay would be their regular entitlement ($120.00), plus a substitute day off work with statutory holiday pay OR their regular entitlement ($120.00) plus 1.5 times their regular rate for each hour worked on the holiday (if Jessie agrees in writing). If Jessie is to also be paid out at 1.5 times their regular rate in addition to their regular holiday entitlement pay, the hours would need to be added manually using the Statutory Holiday Worked income code. The rules for when a statutory holiday falls on a regular work day and is worked varies by jurisdiction. In order to ensure jurisdictional compliance, consult the Labour Program/Ministry of Labour for the employee’s local jurisdiction to determine eligibility.

The Daily wage method will always assume statutory holiday pay eligibility for all hourly employees. If it is deemed that an employee is ineligible due to local labour regulations (for example, if Jessie did not work their full regularly scheduled shift before and their full regularly scheduled shift after the holiday), the assigned statutory holiday pay will need to be removed manually before submitting the payroll for processing. 

Note: It is important to verify with the Labour Program or Ministry of Labour for the applicable jurisdiction(s) to ensure that the automatically assigned statutory holiday pay amount for each holiday meets the minimum pay requirements according to legislation for each employee. 

 

Federal method

This method is for federally-regulated industries/workplaces that fall under the Canada Labour Code. This method uses 1/20th of wages earned in the four weeks immediately before the holiday. Applicable holidays will be assigned according to the employee’s work location.

The federal method for statutory holiday pay calculation is used in Canada to determine how much a federally regulated employee should be paid for a statutory holiday. Under this method, the calculation is based on a percentage (5%) of the employee's earnings during a specific period (the four weeks immediately before the holiday). Note: If the employee is paid by commission, the calculation is 1/60th of the employee’s earnings in the 12 weeks immediately before the holiday, and this amount will need to be calculated and added/adjusted manually within the payroll).

Example:

Sarah’s regular hourly wage is $18.00 per hour at 8 hours per day.

In the four weeks leading up to the holiday, Sarah worked all 5 days of each week and as a result, was paid $2,880.00:

$18.00 per hour at 8 hours = $144.00 per day

$144.00 per day multiplied by 5 days per week = $720.00 per week

$720.00 per week multiplied by 4 weeks = $2,880.00

Next, we’ll determine the Statutory Holiday Pay. Under the federal method, Sarah's statutory holiday pay is calculated as a percentage of her wages earned in the four weeks immediately before the holiday. For federally regulated employees, this percentage is 1/20th (5%) of the average daily earnings:

Statutory Holiday Pay = 1/20th of wages earned in the four weeks immediately before the holiday

Statutory Holiday Pay = $2,880.00 x 0.05 = $144.00 (in this case, because Sarah’s wages did not vary, she is entitled to her regular daily wage of $144.00).

If Sarah worked on the public holiday, she may be eligible for additional statutory holiday pay. If Sarah is to also be paid out at 1.5 times her regular rate in addition to her regular holiday entitlement pay, the hours would need to be added manually using the Statutory Holiday Worked income code. The rules for when a statutory holiday falls on a regular work day and is worked varies by jurisdiction. In order to ensure jurisdictional compliance, consult the Labour Program/Ministry of Labour for the employee’s local jurisdiction to determine eligibility.

The federal method will always assume statutory holiday pay eligibility for all hourly employees. If it is deemed that an employee is ineligible due to local labour regulations, the assigned statutory holiday pay will need to be removed manually before submitting the payroll for processing. 

Note: It is important to verify with the Labour Program or Ministry of Labour for the applicable jurisdiction(s) to ensure that the automatically assigned statutory holiday pay amount for each holiday meets the minimum pay requirements according to legislation for each employee. 

Manual calculation

Statutory holidays are tracked, calculated, and added to the payroll manually.

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