There are Different Types of Wages and Premiums

Today I would like to help dispel the confusion regarding different kinds of wages and premiums that the Employment Standards Act (ESA) provides for workers.

  1. What’s the difference between “regular wage”, “premium wage” and “earned wage”?

Regular Wage refers to the normal rate of pay that the worker receives for doing their job, whether it’s an hourly rate or salary.  This amount cannot be less than the “Minimum Hourly Wage” according to the ESA and would include commissions paid to sales persons.

Premium Wage refers to the 1.5 times rate for overtime or work on a public holiday. It is important to note that while these premiums are both calculated at 1.5 times the regular wage, the hours worked on a holiday do not count towards the number of hours worked for overtime calculations.  This means that if an employee has worked the maximum 44 hours in the week, and then works an additional 5 hours on a public holiday in that same week, the employee would not receive premium pay for overtime; they would receive the 1.5 premium for working on the public holiday, and the paystub must show this calculation as public holiday premium pay.

Earned Wage refers to other monetary compensation given to employees they did not actually work for-such as vacation pay and public holiday pay, and bonuses.

 

  1. Are employers supposed to calculate vacation pay on wages other than the hourly rate?

Yes.  Employers are required to add vacation pay to all wages, including pay for public holidays. The employer is not required to add the 4% vacation pay to the actual vacation pay that is given to the employee at the time they take their vacation leave.

Here’s an example:

Sarah works as a receptionist in an office. She earns $13.00 per hour in regular wages.  On a public holiday such as July 1, she would be entitled to “public holiday pay” for the day off. This is an earned wage because she was paid, but did not actually work.  The employer would be required to add 4% vacation pay to both her regular wages and earned wages for the pay period.

 

Still have questions? Contact me and I will be happy to explain!