Written by: Gwyneth James MBA CPA, CGA, Senior Partner
This month we continue our look at the rules found in the Employment Standards Act (ESA) which is managed and enforced by the Ontario Ministry of Labour. These rules provide direction with respect to paying your employees, but there are certain individuals and organizations that the ESA does not apply to. An example is companies that fall under federal employment law jurisdiction.
Examples of what is covered by the ESA are: minimum wage, overtime, tips and gratuities, hours of work, public holiday pay, vacation pay, leaves, and termination. (See Part I for the first 4 of these.)
There are 9 Public Holidays (“Statutory” Holidays) in Ontario for which employees can take the day off work and be paid. The amount they receive is calculated as the average of the wages and vacation pay (not overtime) from the past 4 work weeks, divided by 20. The same calculation is used if an employee works; however in addition, they are either paid overtime pay for the hours worked or paid regular pay and given a substitute day off. Some jobs are exempt from public holiday pay. Note: The August Civic Holiday is not one of the public holidays.
Vacation pay is compulsory at 4% of earnings, including holiday pay and overtime. It is typically accrued and paid out when the employee takes a vacation. After one year of employment the employee should have two weeks’ worth of pay accumulated that they can ‘cash in’ for time off. The vacation time earned must be taken within 10 months. Employees can forego vacation time with written agreement from the employer, but the employer still must pay the vacation pay. There is no requirement to increase this rate or the weeks of vacation earned after certain years of employment. Very few jobs are exempt from vacation pay.
For more information please contact our office at 705-876-6011 or use our contact form by clicking here.