As most employers know, Ontario recognizes nine public holidays every year. The majority of employees are entitled to take these public holidays off work and receive public holiday pay. Most employees who actually work on these days are entitled to receive premium pay (equal to time and a half wages), in addition to public holiday pay.
One of these public holidays, Good Friday, is just around the corner on April 10, 2020. Ordinarily, Good Friday is the start of a long weekend for most Ontario employees because their employers cease operations for the day. Employees who agree or are required to work on Good Friday are pleased to collect increased pay for the day.
In these precarious days brought on by COVID-19, however, the landscape is totally different. Many employers find themselves in unique circumstances. Public holidays may pose a significant challenge in light of these circumstances. For example:
- Many employers deemed as essential services are very busy and find themselves struggling to maintain adequate staffing to support significant demand. These employers may not be able to close down operations for a public holiday.
- On the other end of the spectrum, many employers that continue to operate, whether deemed as essential services or not, have experienced a severe downturn in business. These employers may be required to limit labour-related costs as much as possible. Payment of public holiday pay without receiving work in return may be a challenge for these employers.
During these unusual times, employers may wish to consider a rarely-used option to address the above concerns. Ontario’s Employment Standards Act, 2000 (the “ESA”) allows employers and employees to implement a substitute day off in place of a public holiday.
Section 27 of the ESA provides that an employee and employer may agree that the employee will work on a public holiday falling on a regular workday and, instead of providing premium pay for the public holiday, the employer will provide regular pay and substitute a future paid day off. Essentially the employee receives public holiday pay for the substitute day off and not the public holiday.
In addition, section 30 of the ESA provides that an employee who would not regularly work on a public holiday can agree to work on the public holiday and be provided a substitute paid day off in the future.
The effect of these provisions is that busy employers can treat a public holiday as a regular workday and keep business running normally while employers that are not as busy can either defer payment of public holiday pay for employees who are not working or require work from employees who receive public holiday pay.
If they agree in writing, the employer and employee can select a substitute day off that does not have to be scheduled until a later date and can be up to 12 months from the date of the original public holiday.
Implementing this option generally requires the agreement of both parties. Ordinarily this would be a challenge as employees often make plans around public holidays and are loathe to delay them. This year, however, substituting Good Friday (and perhaps additional holidays in the near future) for a day off down the road could have potential benefits for both employers and employees:
- Busy employers could use this option to remain operational and fully staffed during these unusual times. This would be beneficial not only to employers in certain key industries but also to the public at large.
- Struggling employers could defer some labour costs to the future. With government measures such as the wage subsidy program and interest-free loans expected to be available for many employers in the near future, a short deferral of costs might be the difference between implementing layoffs and staying the course.
- Employees can work now and save an extra day off for the future when their options for recreation and public interaction are not so restricted.
- Waiting to receive public holiday pay may make financial sense for employees whose hours have been reduced in recent weeks since public holiday pay is based on an employee’s wages in the four weeks before the public holiday.
Employers should note that if the parties agree to a substitution, the employer must eventually provide the employee with a written statement that sets out the public holiday that is being substituted, the date of the substitute day off, and the date that the statement is given to the employee. The statement must be provided before the substitute day off. It can be a very simple letter and it does not need to be signed by the employee.
Under section 28 of the ESA, certain workplaces such as hospitals, nursing homes and restaurants offering takeout and delivery services, can require that employees work on a public holiday and elect to provide these employees with a substitute day off without the agreement of the employees. In these cases, the employer must provide the substitute day off within three months of the public holiday unless the parties agree in writing that it may be delayed for up to 12 months.
For employers with operations outside of Ontario, it should be noted that other provinces have provisions in their applicable employment standards legislation allowing for substitution of public holidays. The public holidays that are recognized in each province and the specific rules and requirements governing the substitution process will vary, however, and therefore should be carefully reviewed. Employers with operations in multiple provinces will want to be especially careful if they want to apply a substitution policy broadly across all Canadian locations.
Given the challenges that employers are currently facing and will face in the months ahead, employers should think creatively in managing their operations. It is a difficult task to balance business realities with employee morale and retaining talent. As such, employers may wish to consider measures that would not ordinarily be on their radar. Options like substitution of public holidays may represent the type of creative solution that will ensure employers succeed through the current crisis and thrive once that crisis is over.
By Matthew E. McCarthy, Gowling WLG