Better to Work Part Time or Full Time? New Statutory Holiday Rules -Where's the Logic?
Ontario introduced its new method of calculating statutory holiday pay at the beginning of 2018. The government’s reasoning being that the existing rule was too complicated, so needed to simplify it.
Under the previous rule, stat holiday pay would be calculated by taking the last 4 weeks’ pay and dividing by 20. Complicated right? The new rules say that you now take the previous week’s pay and divide by the number of days worked in the previous week. (Note that part days are equivalent to full days.)
This has led to some head scratching results. Let’s take two examples:
Jim works full weeks on a reduced schedule in order to look after his kids before and after school. He works 4 hours per day 5 days a week (total 20hrs) and is paid $20/hr – total of $400/week. Under the old system, Jim would be paid $80 for Canada Day as a stat holiday. Under the new system, he would also be paid $80 stat holiday. The $80 holiday pay represents the typical daily pay Jim gets – 4hs @ $20.
Jane, works full days, but only 3 days a week. 7hrs on Wed and Thurs and 6hrs on Friday for a total of 20hrs/week and also earns $20/hr – total of $400/week - the same as Jim. Under the old system, she would have also received $80 stat holiday pay – same amount as Jim, which makes sense given they work the same amount of hours per week, are at the same pay rate and earn the same in a typical week.
However under the new system, Jane would now receive $133.33 of stat holiday pay, ($400 / 3 days) which is $53 more than Jim! Jim can’t be too happy about that.
In addition, Jane works at another job on Mondays and Tuesdays, 7 hrs per day for 2 days at $20/hr. Under the new rules, that employer would also need to pay Jane $140 statutory holiday pay on Canada Day. So on Canada day, Jane has earned $273, basically two full days pay. Meanwhile a typical full time worker, 35 hrs/week at $20 would get $140.
Where is the logic in this?
Martin Kretzschmann CPA CA. Partner at Brabant & Kretzschmann, Chartered Professional Accountants
BRABANT + KRETZSCHMANN
Chartered Professional Accountants
373 Midland Ave
Midland Ontario L4R 3K8