Here’s a test of your payroll knowledge. This is taken from my upcoming guide on statutory holiday in BC:
Linda’s hire date was October 1, 2015. She agreed with her BC employer that she would take off work on Monday, November 16 as a statutory holiday in substitution for Thanksgiving (October 12, 2015). Linda works a regular Monday to Friday work week, 7.5 hours per day at $23 an hour, although she occasionally works either less or more than her regular hours. Between October 1 and October 11, inclusive, Linda worked 7 days and earned $1,100 in straight-time, regular wages. In the 30 calendar days prior to November 16, Linda worked 19 days, for which she earned $3,500 in straight-time, regular wages. She had no other earnings between October 1 and November 15 inclusive.
How much statutory holiday pay, if any, is Linda entitled to be paid for November 16:
- $157.14 – her earnings in the 7 days prior to Thanksgiving divided by the number of days worked ($1,100 / 7);
- Since she was hired on October 1, Linda had not met the requirement for 30 days of employment in the 12 months prior to Thanksgiving;
- $184.21 – her earnings in the 30 calendar days prior to November 16, divided by the number of days worked ($3,500 / 19); or
- $172.50 – her regular daily wage (7.5 hours worked times $23/hour)?
In BC, the normal rule is that employees are entitled to statutory holiday pay if they meet two tests – at least 30 days of employment in the prior 12 months and at least 15 days recognized as work in the prior 30 calendar days. Employees who meet this test are entitled to be paid the daily average calculated as the following earnings in the 30 prior days, divided by the number of days worked within those days:
- Pay for work (except overtime) within these 30 days;
- Vacation pay for vacation time taken within these 30 days;
- Vacation pay paid every pay period, for pay dates falling within these 30 days and
- Any other wages (i.e. non-discretionary bonuses) or employment standards required payments (i.e. wages in lieu of notice) for these 30 days, on an accrual basis.
However, employers and employees may agree to substitute another day for one of the statutory holidays listed in the BC employment standards. If the substitution covers more than one employee, the majority of employees affected must agree. When agreed, the requirements described above apply to the substituted day, the same as for any other statutory holiday.
Based on this, what’s the right answer for Linda’s statutory holiday pay?
The correct answer is number 3. Once the employer and Linda have agreed to the substitution, the BC statutory holiday pay requirements apply to November 16, just as if it had been one of the listed BC statutory holidays. In other words, the requirement for having 30 days of employment applies to November 16, not October 12. Since Linda was hired on October 1, she meets this 30-day test. The employer wasn’t under any obligation to agree to the substitution, but once such an agreement is made, the tests for eligibility transfer to the substituted day.
This is also the reason that number 1 isn’t correct. The statutory holiday pay owing to Linda for November 16 is based on the earnings and work in the 30 days prior to November 16, not to the 30 days prior to October 12.
At first glance, number 2 might seem like the right answer. After all, Linda doesn’t qualify for statutory holiday pay for Thanksgiving; she didn’t have 30 days of employment as of October 12. However, as discussed, once the employer has agreed to the substitution, statutory holiday pay is calculated based on the earnings/days worked in the 30 calendar days prior to the substituted day.
Number 4 is wrong because it doesn’t meet the statutory minimum – the earnings in the prior 30 calendar days, divided by the number of days worked within that period. Where the earnings used in statutory holiday pay calculations vary from period to period (i.e. straight-time hours, piece work, non-discretionary bonuses, sales commissions, etc.), a person’s regular wages may not match what’s required. For Linda, the statutory holiday pay required is higher than a regular day’s pay. The opposite situation, where the required holiday pay is less than a regular day’s pay, might also be possible.
Alan McEwen is a Vancouver Island-based HRIS/Payroll consultant and freelance writer with over 25 years’ experience in all aspects of payroll. He can be reached at email@example.com or (250) 228-5280. If you like these articles, please consider buying one of my Need to Know resources. Signup to my email list to be notified as new resources are added, including webinars and seminars.