As employees across Ontario enjoy the Family Day holiday, some employers are scratching their heads at new provincial public holiday pay calculations that will boost the amount paid to some casual employees. For some businesses with a large part-time work force, the changes mean that during some months they will pay more in additional holiday pay than they'll fork over to the recent minimum-wage increase.
"I'm still kind of in shock," says Tiina Luik, owner of the Bead-Dazzled jewellery and craft store, which employs nine part-time workers at two Ontario locations in Burlington and St. Catharines. In January, Ms. Luik's business paid out an additional $672 in wages after the minimum wage increased to $14 an hour from $11.60. That was less than the additional $813 in public holiday pay she was forced to provide under new rules that took effect on Jan. 1 as part of Bill 148.
Under Ontario's new formula, public holiday pay is calculated by dividing regular wages earned in the pay period before the public holiday by the number of days worked in that pay period. The calculation is based on the past two weeks. In the past, public holiday pay was calculated by taking the amount earned in the four weeks prior to the holiday, divided by 20 days.
Under the old system, for example, a full-time person would get paid a full day for a statutory holiday, and a half-time person would get a half day. Someone that only worked one eight-hour shift a week would receive 20 per cent of a day's pay.
Under the new system, a full-time worker would still get a full day of pay for the public holiday and someone working part-time would get a half day. However, if someone worked just one eight-hour day in the two weeks before the holiday, they would receive eight hours of pay – or a full day, which is the same as a full-time employee. If they worked an eight-hour shift and a four-hour shift they would receive six hours, based on the government's holiday pay calculator. The calculations in this specific example were also confirmed by a Ministry of Labour spokesperson.
"So, work more, get less. The new formula makes zero sense," says Steve Long, president of Long and McQuade Musical Instruments and Yorkville Sound, who has written to Premier Kathleen Wynne's office and Labour Minister Kevin Flynn to complain.
Mr. Long says the new calculation makes it "economically unfeasible" to hire people on a casual basis, which he says is unfortunate for a business like his that employs a lot of semi-retired people and students who like to work on-call.
"It would make no sense to hire people on that basis," he said in an interview.
Given that there are nine public holidays in Ontario each year, Mr. Long calculated that it would be an extra seven full days of pay in 2018 for someone that works one day a week. "This seems so ridiculous one might almost think that there is a mistake in the legislation, but all indications are that this is what was intended," he wrote in his letter to the government. "As an employer, we have no objection to rules that are fair to our employees but we don't support rules that don't make any sense."
A Ministry of Labour spokesperson said the government received complaints in the past that both employers and employees found the previous formula "overly complex and confusing" and that incorrect payment of public holiday pay was one of the most common breaches of the province's Employment Standards Act.
"The simplified formula means that employees are entitled to their average regular daily wage," the spokesperson said in an e-mail statement to The Globe and Mail. "This change brings a small financial relief to part-time employees, who often do not have benefits, and those working multiple jobs to make a living. In addition, as the new calculation is to be made over a pay period as opposed to a set amount of days, it provides more flexibility to employers."
But some business owners believe the government is trying to force businesses to hire more full-time staff, even when employees are opting for part-time work.
"The government needs to remember that part-time workers, in many cases, want to be part-time," says Julie Kwiecinski, director of provincial affairs for Ontario at the Canadian Federation of Independent Business (CFIB). The CFIB issued a report last year showing three-quarters of part-time work is "demand driven, representing the needs and desires of employees," and up from just over two-thirds in 1997.
Ms. Kwiecinski says many companies will stop hiring part-time workers as a result of the change.
"I will not be hiring any more part-timers," says Ms. Luik, whose craft store has only part-time staff, including retirees and people who work there because it ties in with their hobbies. Ms. Luik estimates the new public holiday pay will cost her an additional $7,300 this year, taking into consideration the nine months with the public holidays, while the higher minimum wage will cost about an extra $8,000 over 12 months. In 2017, she paid about $33,000 in wages, including public holiday pay.
Shelley Clair, owner of Orr Cleaners in London, Ont., says her business is also affected by the changes to public holiday pay.
Ms. Clair has an employee who works a seven-hour shift one day a week, who will now get seven hours of public holiday pay for each holiday. That is the same public holiday pay as a full-time staff person working 35 hours a week will receive. Under the old rules, that same part-time staffer working one day would have received 1.4 hours of pay for a public holiday.
She also has two part-time workers, who split a full-time job, who will each get nine hours of public holiday pay under the new rules. In the past, they would each get 4.5 hours of pay for every public holiday.
Ms. Clair estimates her overall payroll will go up by 429 hours in 2018, based on changes in public holiday pay alone. "That's one full-time person's pay for over 12 weeks."
Adds Ms. Clair, "I can only imagine what it's costing larger businesses who have a lot of part-time people."
Keep up with the latest entrepreneurship news by signing up for free Report on Small Business newsletter.