Prince Edward Island’s new Employment Standards Act came into force on June 30, 2026, marking the most significant overhaul of the province’s employment laws in more than 20 years.
The legislation modernizes workplace standards to better reflect today’s workforce while expanding employee protections and introducing new employer obligations. From overtime and scheduling requirements to sick leave, vacation entitlements, and termination rules, the changes affect nearly every stage of the employment relationship.
For employers, this is more than just another legislative update. Existing employment contracts, employee handbooks, payroll systems, scheduling practices, and workplace policies may all need to be reviewed to ensure compliance.
Here’s a closer look at the most important changes and what they mean for your business.
1. Overtime Begins After 44 Hours
One of the most significant changes is the reduction of the standard work week from 48 hours to 44 hours. Employees are now entitled to overtime pay at 1.5 times their regular wage after working more than 44 hours in a week.
For employers, this means payroll systems should be reviewed immediately. Organizations that continue calculating overtime after 48 hours risk underpaying employees and exposing themselves to wage claims.
The new Act also introduces additional flexibility.
Employers and employees may agree, in writing, to average hours worked over a period of two to four weeks when calculating overtime. Employees may also choose to receive paid time off instead of overtime pay, banking 1.5 hours of paid leave for every overtime hour worked, provided the arrangement is made in writing.
Some industries, including highway construction and maintenance, seafood processing, trucking, and community care facilities, may continue operating under different overtime rules where permitted by the Employment Standards Board.
2. New Scheduling Requirements
The new legislation introduces several scheduling rules that many employers may not have encountered before.
Unless specific exceptions apply:
- Employees must receive their work schedule at least one week in advance.
- Employees must receive at least eight consecutive hours of rest between shifts.
- Split shifts must be completed within 12 hours of the employee starting work.
These requirements may require employers to rethink scheduling practices, particularly in industries that rely on rotating shifts, variable hours, or last-minute schedule changes.
3. New 27-Week Medical Leave
The Act introduces a new unpaid, job-protected medical leave.
Employees with at least 90 days of continuous employment may take up to 27 weeks of unpaid leave within a year if they are unable to work because of:
- illness or injury;
- recovery from medical treatment;
- organ or tissue donation;
- gender-affirming care; or
- other prescribed medical procedures.
Because this leave is job-protected, employers are generally required to reinstate employees to their position when the leave ends.
Employers should review leave policies and employee handbooks to ensure they reflect these new entitlements.
4. Sick Leave Rules Have Changed
The new Act expands sick leave protections while reducing unnecessary requests for medical documentation.
Employees become entitled to four unpaid sick days per year after completing 30 days of employment.
Paid sick leave is then introduced based on length of service:
- After one year: 1 paid sick day, plus 4 unpaid days
- After two years: 2 paid sick days, plus 4 unpaid days
- After three years: 3 paid sick days, plus 4 unpaid days
The rules surrounding medical certificates have also changed.
Employers may now generally request a sick note only when an employee has been absent for five or more consecutive days, rather than after three days.
In addition, medical certificates are no longer limited to physicians and nurse practitioners. Other licensed health professionals may provide documentation if they are treating the employee, are qualified to diagnose the condition, and the illness or injury falls within their scope of practice.
These rules now apply to unionized employees as well.
5. Vacation Entitlements Improve
Employees will now qualify for three weeks of annual vacation after five years of continuous employment, rather than after eight years under the previous legislation.
The Act also clarifies how vacation entitlements apply to part-time, seasonal, and short-term employees, providing greater consistency across different types of employment.
Payroll practices have changed as well.
Pay statements must now clearly identify amounts paid for statutory holiday pay and any paid leave, making payroll records more transparent for employees.
6. New Citizenship Ceremony Leave
The legislation introduces a new unpaid, job-protected leave for employees attending their Canadian citizenship ceremony.
After completing 90 days of employment, eligible employees may take one unpaid day off to attend their ceremony.
While this leave may affect relatively few employees, employers should still update leave policies to include it.
7. New Rules for Terminations and Layoffs
The threshold for individual notice of termination has changed significantly.
Previously, employees became entitled to statutory notice after six months of continuous employment. Under the new Act, that entitlement begins after only 90 days.
The legislation also introduces new group termination requirements.
Where an employer terminates 10 or more employees within a two-month period, and those employees represent at least 25% of the workforce at that workplace, the employer must provide at least six weeks’ notice.
That notice must be provided not only to affected employees, but also to any applicable union and the Government of Prince Edward Island.
Employers planning restructures or workforce reductions should carefully assess whether these new requirements apply before proceeding.
8. Tip Pooling Policies Must Be Posted
While employers were previously required to have a tip pooling policy, the new legislation now requires that policy to be posted in the workplace where employees can easily access it.
Businesses in the hospitality and food service sectors should ensure their policies are current and properly displayed.
9. Stronger Enforcement Powers
The new Act strengthens enforcement in several ways.
The time limit for employees and employers to file complaints with the Employment Standards Branch has increased from one year to two years.
In addition, Employment Standards inspectors now have the authority to issue penalties where employers fail to comply with the legislation.
This means non-compliance may now result in more immediate enforcement action rather than relying solely on formal complaint processes.
What Employers Should Do Next
Although the province has indicated that its initial focus will be on education and helping employers understand the new legislation, businesses should not assume there will be an extended grace period. The new rules are already in force.
A proactive compliance review can help reduce the risk of complaints, payroll errors, and costly corrective action.
Employers should consider taking the following steps:
- Update payroll systems to calculate overtime after 44 hours.
- Review employee handbooks and workplace policies to reflect the new leave entitlements.
- Update scheduling practices to comply with advance scheduling and rest period requirements.
- Revise sick leave and medical certificate policies.
- Confirm vacation policies and payroll practices align with the new legislation.
- Review employment agreements and termination procedures.
- Ensure managers and supervisors understand the new requirements before making employment decisions.
Final Thoughts
The new Employment Standards Act represents one of the most significant changes to employment law in Prince Edward Island in decades. While many of the amendments expand employee rights, they also create new compliance obligations for employers.
Taking the time now to review your workplace policies, contracts, payroll processes, and HR practices can help ensure your organization remains compliant and avoids unnecessary disputes as the new legislation takes effect.
If you’re unsure whether your employment documents and workplace practices comply with the new Act, HR Covered can help. Our HR and employment law professionals assist employers with updated policy, employee manuals, employment agreements, payroll compliance, and workplace best practices to help businesses stay ahead of legislative changes.
Source: Changes to the Employment Standards Act | Government of Prince Edward Island
