Previously, I have written about differences between the insurable earnings and hours reportable for statutory holidays. While all such earnings are insurable, there is a very different story for any related hours. The general rule for statutory holidays is that the insurable hours are the greater of:
- any hours actually worked on that day; and
- the hours that an employee, including zero, would normally have worked on that day.
This rule applies to any of the following:
- the actual statutory holiday, i.e. Labour Day;
- a day recognized in its place, i.e. Monday, September 2, 2013;
- a day in lieu, i.e. an employee works on Labour Day in exchange for another day off, at a later date; or
- any other type of ‘floater’ holiday.
Based on this rule, the following factors affect the number of hours recognized for Record of Employment reporting purposes for each statutory holiday paid by employers:
- whether employees also work on the statutory holiday;
- whether employees were in active service, inactive employment or had been terminated as of the statutory holiday; and
- for employees in active service, whether the statutory holiday would otherwise have been a working day.
As in many other aspects of payroll, the devil is in the details. You will see from the examples below that, because of the possible factors above, reporting the correct number of insurable hours is not as simple as it might at first appear. Yet getting this number correct can be of vital importance to employees. Service Canada and the Employment Insurance Commission are bound by legislation that strictly limits entitlement based on the number of reported insurable hours. For example, if an employee requires 600 hours to establish an EI claim for maternity or parental benefits, such a claim will be denied if the applicable hours are only 599. In other words, every insured hour could potentially mean the difference between succeeding in or failing to establishing a claim for EI benefits.
Active Employment, Statutory Holiday on a Non-Working Day
Example: Lucas normally works Tuesday to Saturday, for his Ontario employer. In 2013, Lucas does not work Labour Day. In Ontario, under the applicable employment standards, employees in active service are entitled to another day off in lieu. Instead of this, Lucas and his employer agree to just pay him the statutory holiday pay owing. Since Lucas was in active service on Labour Day, did not work that day and the day itself was not normally a working day for Lucas, the insurable hours reportable for that day are zero.
Active Employment, Statutory Holiday on a Working Day
Example: Jennifer normally works Monday to Friday, 7.5 hours per day. On Good Friday in 2013, Jennifer works 9 hours. Under the BC employment standards, Jennifer is entitled to $100 for Good Friday itself, and 9 hours at time-and-a-half. At her regular hourly rate of $12, Jennifer is paid $162 for that actual work. Her insurable earnings are $262 and her insurable hours are 9. Since Jennifer was in active employment on that day, and worked the holiday, the insurable hours are the greater of the hours worked and the otherwise normal hours for the day.
Under no circumstances would the correct insurable hours be 16.5, the sum of the 7.5 that would otherwise have been worked and 9 that actually were. By contrast, had Jennifer not worked that day, the insurable hours would have been 7.5, the normal, otherwise work hours for that specific day.
Inactive Employment (Vacation, Lay-Off or Leave)
Example: John was off on parental leave on Canada Day, Monday July 1, 2013. He normally worked 4 days per week, Tuesday to Friday. His last day of work, prior to starting parental leave, was June 7, 2013. Under the Ontario employment standards, John is entitled to statutory holiday pay, of $25, but no day in lieu on return to active service. John’s normal hourly rate is $14.50. Since John was on leave, the insurable hours for Canada Day are 1.7. This is the lowest of his normal hours of work for that day and the lump-sum pay for the day, divided by his normal hourly rate. Since he did not normally work Mondays, John’s normal hours of work for Canada Day are zero. His holiday pay, divided by his normal hourly rate is $25 / 14.5 or 1.7 hours.
Terminated and Entitled to Statutory Holiday Pay
Example: Frieda was terminated, without cause, effective Monday, September 30, 2013. Since Thanksgiving falls within 28 calendar days after this termination date, under the Manitoba employment standards, Frieda is entitled to statutory holiday pay for Thanksgiving, October 14, 2013. Her statutory holiday pay for that day is an insurable earning and was paid with her final semi-monthly pay. However, since Frieda was not in active service, was not on a leave or lay-off on Thanksgiving and did not work that day, there are no insurable hours related to the statutory holiday pay itself.
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 firstname.lastname@example.org, (250) 228-5280 or visit www.alanrmcewen.com for more information. This article was first posted to Canadian HR Reporter on July 30, 2013.