Stat Holiday Pay after the End of Employment?

Last week we looked at the impact of statutory holidays on the calculation of wages in lieu of notice, where holidays fall in the notice period. This week we look at it the other way round. If an employee quits, is given notice or is terminated without notice, are employers required to pay stat holiday pay, on top of any wages in lieu of notice owing?

In two of the jurisdictions looked at last week, the federal and Manitoba employment standards provide clear answers.

Under the federal Canada Labour Code, employers are only required to pay stat holiday pay for holidays that fall within the period of employment. The question then becomes, when does the employment relationship end? This depends on how employees are terminated or quit

Let’s look at how employees might be terminated:

  1. The employer might terminate an employee on the spot, giving them their last pay and written notice of termination, with an immediate end to the employment relationship;
  2. The employer might give an employee notice of termination, with the notice period being worked. When worked, ordinary wages are paid during the notice period;
  3. The employer might give an employee notice of termination, with no requirement to work the notice period. When not worked, we refer to this as salary continuance.

While these describe how an employer might end the employment relationship, the result is the same if the employee quits with no notice, gives notice but continues working or gives notice and is told by the employer not to work out the notice period.

In the first case above, when an employee quits or is terminated on the spot, with no notice by either party, the employment ends immediately, so there is no employer liability under the federal employment standards for stat holidays that fall after these “on the spot” actions.

In the 2nd and 3rd cases, the employment relationship ends when notice has expired. For example, an employee might, on August 19, give notice of resignation effective Friday, September 6, 2013. Since Labour Day, Monday, September 2 falls during this notice period, the employee must be paid any stat holiday pay the person is otherwise entitled to, whether it’s the employee or employer who has given notice.

By contrast, under the Manitoba employment standards, however an employer terminates an employee otherwise entitled to notice, stat holiday pay will still be payable, for holidays that fall within 4 weeks following termination.

Example: Francis worked in a women’s clothing store in Winnipeg. She was terminated, with no prior notice, effective Sunday, August 11, 2013, after the end of her normal work hours for that day. On termination, Francis was otherwise entitled to 8 weeks notice. The wages in lieu of notice owing to Francis were $1,000 per week. For Labour Day, September 2, the stat holiday pay owing is 5% of her wages, excluding overtime, earned in the 4 weeks from August 4 to September 1, 2013, inclusive. These wages, from August 4 to 11, inclusive were $800. For the 3 weeks from August 12 to September 1, her wages in lieu of notice totalled $3,000. The stat holiday pay owing to Francis is 5% of $3,800 or $190. Note, this is on top of the wages in lieu of notice also owing.

In BC, Alberta and Saskatchewan the situation isn’t as clear cut as it us under either the federal or Manitoba employment standards.

In all 3 of these jurisdictions, employees who work a notice period, and are otherwise entitled, must be paid stat holiday pay for any holidays that fall in the notice period. In other words, working notice, whether notice was given by employer or employee, is just like any other period of employment.

However, the situation is different for salary continuance, where employees are not normally expected to work during the notice period.

In BC, employees must have worked at least 15 days in the 30 calendar days prior to the stat holiday. For example, an employee in BC whose salary continuance starts on Monday, August 26, 2013 may meet this test, for Labour Day, but an employee whose salary continuance started on or before Thursday, August 1st, could not.

In Alberta, the obstacle is that stat holiday pay is only payable for holidays that would normally have been a work day. It’s reasonable to assume that no day for an employee on salary continuance is a work day, so employees on salary continuance are not entitled to stat holiday pay under the Alberta employment standards.

In Saskatchewan, the minimum requirement for stat holiday pay, under the existing employment standards, is an employee’s regular wages for the day. Since salary continuance would already meaning paying these regular wages, there is no additional requirement to pay stat holiday pay on top of salary continuance. In other words, under existing legislation, there’s no requirement to pay stat holiday in addition or on top of salary continuance.

Where employment ends without notice, employers are not liable in these 3 jurisdictions for stat holiday pay.

In BC, this is because, once wages in lieu of notice have been paid, a person no longer meets the definition of “employee” under the BC Employment Standards Act.

In Alberta, the same rule applies as for salary continuance. An employee whose employment ends without notice does not have normal work days and stat holiday pay is only payable, other than for work on a holiday, for holidays that would otherwise be an employee’s normal working day.

In Saskatchewan, under current legislation, once employment ends without notice, the person no longer meets the definition of “employee” under the Labour Standards Act.

Please note there is new employment standards legislation, passed by the Saskatchewan legislature, but not yet proclaimed into law. When this new legislation becomes effective, Saskatchewan employers will then be liable to pay stat holiday pay to employees on salary continuance, for any holiday that falls in the salary continuance period. Similarly, so long as wages in lieu of notice are outstanding, stat holiday pay will also apply to employees terminated without notice.

Example: John is terminated without notice and without cause on July 15, 201x. The employer owes John wages in lieu of notice under the new Saskatchewan Employment Act, however, these aren’t paid until October 1, 201x. The wages in lieu of notice owing to John, until that date, are 8 weeks normal wages. For each of Saskatchewan and Labour Day, John is entitled to stat holiday pay, calculated as 5% of his earnings, including wages in lieu of notice, related to the 4 work weeks to prior. If John’s wages in lieu of notice are $800 a week, John must be paid $160 in stat holiday pay for each of these two holidays ($800 per week, times 4 weeks, at 5%).

Alan McEwen is a Vancouver Island-based HRIS/Payroll consultant and freelance writer with over 20 years’ experience in all aspects of the industry. He can be reached at armcewen@shaw.ca, (250) 228-5280 or visit www.alanrmcewen.com for more information. This article was first posted to Canadian HR Reporter on July 23, 2013.

 

 

About Alan R. McEwen

HRIS/Payroll consultant and freelance writer
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