Non-statutory Holiday Shutdowns in Canada
At the best of times, navigating payroll can be complex, now consider having to deal with holiday shutdowns too. While statutory holidays in Canada tend to have clear guidelines, that is not the case for non-standard holidays or shutdowns. This often raises questions about employee pay.
Making sure that employees are compensated fairly is not only important for their morale but also prevents any potential compliance issues. So, let’s break down the process and get you equipped with knowledge that you need to handle these situations with confidence.
How to calculate pay for non-statutory holidays in Canada
One of the first things to keep in mind is that statutory holiday entitlements aren’t the same across Canada. Each province and territory has its own set of rules. So, when you’re thinking about non-statutory shutdowns, you’ll need to be very clear on what applies in your specific area.
Now, when it comes to those non-statutory holiday shutdowns, it’s not just about what you’d like to do. Employers have to carefully consider their legal obligations. That means looking at both legislation and how common law might apply. It’s a bit of a tightrope walk, and getting it wrong can lead to some tricky situations. So, it’s wise to be thorough.
Then there’s the question of how to handle employee pay during these shutdowns. You’ve got a few options. You could provide paid time off, ask employees to use their vacation time, or go with an unpaid day off. Each of these has its own set of considerations, and the best approach will depend on your specific workplace and your employees’ contracts.
How do non-statutory holidays differ from statutory holidays?
Now we have already covered this topic in some greater detail in our blog How to Shut Down for Non-statutory Canadian Holidays, so go check that one out for more details. But since you’re here, here is a quick overview of what we covered in that one.
Statutory holidays are paid days off work enjoyed by workers in every Canadian jurisdiction. There are only four days each year when every jurisdiction offers a paid holiday: New Year’s Day, Canada Day, Labour Day, and Christmas Day.
Non-statutory holidays are holidays that are not mandated by law. These are additional days off that employers may choose to provide to their employees, often as a benefit or for religious occasions not covered by statutory holidays.
What options do you have for non-statutory holidays shutdowns in Canada?
When planning for non-statutory holiday shutdowns, you’re going to have to make a decision on how to handle employee compensation. Essentially, you have a few options, however, there are two primary options to consider. Each option has its own implications for both your business and your employees, so it’s important to weigh them carefully. Let’s take a closer look at the common approaches which are either providing pay for the shutdown period or requiring employees to use their accrued leave days.
Paying employees for non-statutory holidays
If you want to shut down on a non-statutory holiday, the simplest choice is to pay your employees as if it were a statutory holiday. This is not required under employment legislation, but it helps ensure employees are OK with being off work. If you provide pay at their regular rate, there is little reason for them to take issue with a day off.
This is a great way to reward employees collectively, or you could position it as an employee wellness initiative by writing it into your health and wellness policies. One in five Canadians experiences mental illness in their lifetime. How can small and medium-sized organizations overcome stigma surrounding mental illness, and promote sound mental health among employees? Start with downloading our free guide to mental health in the workplace. Learn how to speak up about mental health at your workplace today.
If provisions exist in an employment contract that provide standardized pay across a set period, such as in some instances of salaried employees, employers are bound by that contract and must pay the employee that set amount whether they choose to shut down for a non-statutory holiday or not. Even in cases where employees are compensated above legislative requirements, such as providing wellness days or extra vacation time, some decisions can change the outcome for you as an employer.
Using vacation time for non-statutory days-off
Using Ontario as an example, workers who have been employed for at least 12 months are entitled to two weeks of vacation time and three weeks if they have been employed for at least five years. Vacation pay entitlements are calculated based on a percentage of earnings.
This arrangement is similar in other jurisdictions, but regardless of where you do business, it’s important to consider that workers may have entitlements above legislative minimums written into their employment contracts. Our Ultimate Guide to HR and Compliance in Canada is a great place to start if you’re looking for up-to-date legislation and information on employee rights.
In most circumstances, you can choose when your employees take vacation time, such as to ensure operations continue without loss or to ensure the employee uses their entitlements before they expire. However, there are restrictions on employers requiring employees to take vacation time when the employer sees fit.
Using Ontario’s Employment Standards Act, 2000 as an example, employers can dictate when an employee takes vacation, but it cannot be in periods of less than one week. This means that in Ontario, you could require employees to use vacation time to cover non-statutory holiday shutdowns, but unless the employee agrees in writing, that assigned vacation use must be no less than one week, covering the non-statutory holiday and sometime before or after it. This information can be communicated using a simple vacation assignment memo.
Not paying employees for non-statutory days off
Shutting down for non-statutory holidays with little notice and not paying your employees is not a good idea, primarily because it erodes trust in the employment relationship and can lead to costly consequences if correct steps aren’t taken. However, if an annually occurring scheduled shutdown on a non-statutory holiday without pay is written into the employee’s contract, both you and any employees who agree to it are bound by the agreement, and no pay is required for that day.
If a shutdown without pay is not written into the employment contract, things can be more complicated. You could make a formal written request to your employees to shut down without pay, and if all employees who would be expected to work that day agree to it, then no further consideration is required.
If you plan for these non-statutory shutdowns to occur annually, but employment contracts already exist, an agreement can be drafted to cover the provisions and requirements surrounding the time off each year. This way, you only need to receive consent from employees once.
A great way to ensure everyone understands all requirements relating to time off is to implement a time off policy. Include information for unique situations and how they affect employees so there are no surprises if you want to mandate time off.
Shutting down for holidays
Holidays in Canada are a chance to enjoy some rest and time away from work. With each jurisdiction experiencing different statutory holidays, employers may recognize the value of providing employees with time off above their statutory entitlements.
Each jurisdiction has its own rules for holidays and time off, so review those legislative requirements, and decide to either pay, not pay, or require vacation time usage from your employees for the time off. By communicating these expectations with them, you can provide employees with rest and relaxation, which both enriches their personal lives and lets them perform their best when they return to work.
Streamline calculating holiday pay for employees today!
Navigating non-statutory holiday shutdowns in Canada requires a careful balance of legal compliance, employee consideration, and operational needs. As we’ve discussed, understanding your obligations and options is important for maintaining a positive workplace and avoiding potential legal issues. Remember, clear communication with your employees throughout this process is key to ensuring a smooth and fair outcome for everyone involved. We know that managing payroll and navigating complex employment standards can be challenging.
That’s why we offer comprehensive HR solutions designed to simplify your processes and ensure compliance. From expert advice on holiday pay calculations to up-to-date resources on Canadian employment legislation, we’re here to support you every step of the way. Let us help you streamline your HR tasks, allowing you to focus on what matters most, growing your business! Book a personalized demo with us today to learn how our services can make managing non-statutory holiday shutdowns, and all your HR needs, easier.