By OptiVal Editorial Desk
Thanksgiving is this Monday. If your payroll runs through a remote bookkeeper or an offshore payroll support team, this is the week to make sure they know Ontario’s statutory holiday rules cold. Get them wrong and you either overpay (annoying) or underpay (a compliance problem that can surface in a Ministry of Labour complaint).
Statutory holiday pay in Ontario is one of the most commonly miscalculated items in small business payroll. The rules look simple until you hit the edge cases: the part-timer, the employee who called in sick the Friday before the holiday, the holiday that lands on a Saturday. Here is what the law actually says, plus the checklist your remote bookkeeper should be working from.
The 9 Ontario public holidays
Ontario’s Employment Standards Act names exactly nine public holidays: New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Christmas Day, and Boxing Day. That is the full list. Easter Monday, the August Civic Holiday, and Remembrance Day are not public holidays under the ESA, even though plenty of employers treat them as days off. If your bookkeeper has been paying statutory holiday pay for any of those three, that is money you never owed. (Side note: Ontario is the only province where Boxing Day is a statutory holiday.)
Who qualifies: the “first and last” rule
There is no waiting period. An employee qualifies for public holiday pay from their first day on the job, full-time or part-time. But there is a catch owners forget: the “first and last” rule. To keep the entitlement, the employee must work their entire last scheduled shift before the holiday and their entire first scheduled shift after it, unless they had reasonable cause to miss one. An approved day off or a genuine emergency counts as reasonable cause. Deciding to start the long weekend early does not.
If an employee agreed in writing to work the holiday itself and then no-shows without reasonable cause, they lose the holiday pay as well. Your remote bookkeeper should be checking attendance on those two shifts before every holiday pay run, not just assuming everyone qualifies.
How statutory holiday pay is calculated in Ontario
Here is the formula, straight from the ESA: add up the employee’s regular wages earned in the four work weeks before the week containing the holiday, add the vacation pay payable on those wages, and divide by 20.
Two details trip people up. First, “regular wages” excludes overtime and premium pay. Second, vacation pay is included in the calculation, which surprises most owners. Take a part-timer earning $3,200 in regular wages over those four weeks, with 4% vacation pay ($128) owing on it. The holiday pay is ($3,200 + $128) divided by 20, which comes to $166.40. For a full-time salaried employee, use the salary earned in those four weeks; the math works the same way.
Note the window: it is the four work weeks before the week the holiday falls in, based on your work week, not simply “the last month.” Close enough in most cases, but your bookkeeper should be using the right window.
When the holiday lands on a day off
This one matters right now. In 2026, Christmas Day falls on a Friday and Boxing Day on a Saturday. For a Monday-to-Friday employee, Boxing Day is not a working day, so there is no day off to give. The ESA answer is a substitute day off with public holiday pay, scheduled within three months of the holiday (it can stretch to twelve months if the employee agrees in writing). Many employers simply give Monday, December 28. Alternatively, the employee can agree in writing to take just the holiday pay and skip the substitute day. What you cannot do is nothing.
The same rule covers a holiday that falls during an employee’s vacation: substitute day or agreed pay, same timelines.
When an employee works the holiday
Most employees can refuse to work a public holiday. If they agree in writing to work it, there are two legal options: pay them their regular rate for the hours worked plus a substitute day off with holiday pay, or (with a written agreement) pay the holiday pay plus premium pay at 1.5 times their regular rate for the hours worked. Either way, the holiday pay itself is still owed on top. And note the written-agreement requirement: handshake deals do not count if there is ever a dispute.
A few industries play by special rules. Hospitals, hotels, restaurants, taverns, and continuous operations can require employees to work holidays, with the substitute-day arrangement as the default. If that is your business, make sure your bookkeeper knows which regime you are under.
The remote bookkeeper’s statutory holiday checklist
Hand this to whoever runs your payroll, in-house or through our remote staffing team:
- Keep all nine Ontario dates on the payroll calendar a year out, with Boxing Day and Canada Day flagged whenever they land on weekends.
- Run the first-and-last attendance check before every holiday pay run.
- Use the ESA formula: four work weeks of regular wages plus vacation pay, divided by 20. Never fold overtime into it.
- Keep written agreements on file for every substitute day and every premium-pay arrangement.
- Track substitute days taken and still owed, with the three-month deadline visible.
- Remember that part-timers and brand-new hires qualify. There is no minimum service.
- Do not pay statutory rates for Easter Monday, the Civic Holiday, or Remembrance Day unless you have chosen to offer them as extra paid days.
Mistakes that cost owners money
The greatest hits: paying holiday rates for days that are not statutory holidays; leaving vacation pay out of the 1/20 calculation; using the pay period instead of the four-work-week window; paying the 1.5x premium to someone who worked the holiday but forgetting the holiday pay itself; and running substitute days on verbal agreements that evaporate when memories differ. If your team spans provinces, the province-of-employment rules add another layer your bookkeeper has to get right. And remember that late or short payroll remittances carry their own penalties on top of any holiday pay errors.
Get payroll off your plate
Statutory holidays are exactly the kind of detail that eats an owner’s Friday afternoon and still goes wrong. Our payroll service runs at $29 per employee per month plus a $149 setup (see pricing), and holiday pay calculations are part of every pay run. We are led by qualified professionals with more than 75 years of combined experience, so the 1/20 rule is handled before you ever think about it. Book a free consultation and cross this one off your list before Monday.
