How to handle vacation time versus vacation pay when owed
Question: How should an employer handle an employee who doesn’t want to take her vacation? Should the employee be forced to take time off or should the employer just pay the employee vacation pay in lieu?
Answer: Perhaps surprisingly, this is an issue that comes up fairly often. Statistics have shown many Canadians don’t take advantage of their full entitlement to vacation each year and, in many cases, employers are content to allow the situation to continue. However, what is an employer to do when employees refuse to take vacation even after being instructed she must do so?
To begin with, we must distinguish between the statutorily-required vacation and anything that has been offered beyond that. In Ontario, for example, every employee is entitled to two weeks of vacation per year according to the Employment Standards Act, 2000. I note, however, that this accrues at the end of the first year of employment. Technically, employees are not statutorily entitled to vacation during their first year of employment, though many employers offer vacation anyway.
In Ontario, statutorily required vacation time must be taken within 10 months following the end of the vacation entitlement period. While employment standards legislation is similar across the country, there are some minor variations.
Employers have the right to determine when an employee can take her vacation. While most try to accommodate employee requests, the employer has the final say. At the same time, employers must ensure employees take their statutory vacation, or risk a finding that they have breached the applicable legislation.
When an employee genuinely chooses not to take her statutory vacation time, the parties must enter into a written agreement that is approved by the Director of Employment Standards (in Ontario — other jurisdictions may vary). This does not relieve the employer of the obligation to pay vacation pay.
It is, of course, common for employers to offer more than the bare minimum amount of vacation time. With respect to vacation time beyond the statutory minimum, it is open to the parties to enter into any agreement they choose. I often draft vacation clauses which provide that the employee must take her statutory vacation time within the year it accrues, and that any additional vacation time is offered on a “use it or lose it” basis.
Like many HR issues, a clear and consistently enforced policy is extremely important and will help decide the course of action.
