August 27, 2019

Holiday and overtime banking reforms in Alberta’s Bill 2

Alberta’s Bill 2 comes into effect on Sept. 1, and with it come several changes to the province’s labour and employment laws. Here, Lyndee Patterson reviews changes impacting general holiday pay and overtime banking, and what organizations with employees in Alberta need to know.

Alberta’s Bill 2, An Act to Make Alberta Open for Business, passed in July and comes into effect Sept. 1, 2019.

Bill 2 made several changes to the province’s labour and unemployment laws, however, this post will focus on the changes impacting general holiday pay and overtime banking under the Employment Standards Code. To understand what this could mean for your organization, read on.

Additionally and separate from Bill 2, for the benefit of Alberta employers, we note Alberta’s new minimum wage category. It came into effect on June 26, 2019 (as a regulatory amendment) and permits payment of a lower minimum wage rate for students under 18 ($13/hour instead of $15/hour).

Bill 2: Why are the requirements for holiday pay and overtime agreements changing (again)?

Alberta's recent change in government helps to explain these changes. You may recall that in 2017, Alberta’s then-NDP government passed Bill 17, which made changes to a number of minimum employment standards. Bill 2, introduced by the United Conservative Party in late May 2019, reverses some of those changes:  

 

Requirement effective Jan. 1, 2018

Requirement effective Sept. 1, 2019

Holidays

Holiday Average: 5% of wages from the previous four weeks worked

 

Eligibility for holiday average:

  1. No normal day of work requirement. This removed the five of nine rule (i.e. to check whether the employee worked at least five of the nine Mondays preceding a holiday Monday).

 

  1. No requirement to work 30 days in the 12 months before the holiday.

Holiday Average: No change to calculation

 

 

Eligibility for holiday average:

  1. Normal day of work requirement returns. Only pay holiday average if the holiday falls on a normal day of work for the employee. This reintroduces the five of nine rule.

 

 

  1. Requirement to work 30 days in the 12 months before the holiday.

 

Approach to wages – what to include to calculate the holiday average

Since January 2018 and going forward:

Exclude: Overtime, discretionary bonuses, termination pay

Include: Vacation pay, general holiday pay

 

Overtime

Banking rate: 1.5 time default by agreement

 

Banking rate: straight time default by agreement

 

 

Note: The holiday row in the above chart illustrates what has changed, but does not list the other holiday eligibility criteria (the before and after test* and the refusal to work qualifier**). Those criteria remain valid.

*The before and after test assesses whether the employee works the last scheduled day before the holiday and the first scheduled day after the holiday.

**If an employee refuses to work on a holiday when scheduled they are not eligible to receive average daily pay.

What are the holiday pay requirements for worked/unworked time?

Starting with the Sept. 2, 2019 holiday:

Holiday unworked: Alberta employees who do not work on a holiday and are otherwise eligible to receive holiday pay (because they pass the before and after test and did not refuse to work a holiday when scheduled) will only be entitled to receive the average daily wage if:

Eligibility #1: They have worked for you for 30 days or more in the 12 months before a holiday and

Eligibility #2: The holiday falls on a day that they’ve worked at least five of in the last nine weeks

Holiday worked: Alberta employees who work on a holiday and are otherwise eligible to receive holiday pay (because they pass the before and after test and did not refuse to work a holiday when scheduled) will be entitled to different holiday pay depending on their situation:

Qualifiers (when holiday worked)

Pay entitlement (when holiday worked)

1.  30-day qualifier is not met

 

· No 1.5x wage rate (employee gets paid for time worked as if the day were not a holiday)

· No average daily wage

 

2.  30-day qualifier is met and the holiday falls on a day of the week that they’ve worked at least five of in the last nine weeks

 

· Yes 1.5x wage rate

· Yes average daily wage

3.  30-day qualifier is met but the holiday does not fall on a day of the week that they’ve worked at least five of in the last nine weeks

 

· Yes 1.5x wage rate

· No average daily wage

 

The requirements for worked/unworked time, above, were developed with reference to Alberta’s “General Holiday Pay Flow Chart,” which reflected pre-2018 eligibility. More information on Bill 2 changes can be found here. If you have any questions, please contact Alberta Employment Standards directly for clarification.  You can also set up an alert for updates to their site.

What does this mean for employers?

With these reforms, employers are in a unique position to determine how they move forward.  Employers who:

  • choose to be more generous than the minimum standards do not need to make changes.
  • need to (or choose to) adhere to minimum standards can make changes that may reduce the number of employees who are eligible for holiday pay, the amount of overtime paid to employees and the labour spend associated with student employees under 18.

These changes happened quickly, but businesses can still confirm the impact and relevance of these changes in the context of their operations, and work with their legal advisors to understand their obligations and how best to respond.  

Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.

Lyndee Patterson

Residing in Winnipeg, Manitoba, Lyndee Patterson is a lawyer on staff at Ceridian responsible for legislative compliance and for monitoring the provincial and federal legislative landscapes from an HCM perspective. She also represents Ceridian on the Federal Government Relations Advisory Council.

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