ESA didn't apply as collective agreement provided greater benefit
An Ontario employer is not entitled to force employees to take more than two weeks of their annual vacation entitlement under its collective agreement, an arbitrator has ruled.
La Rocca Creative Cakes is a bakery in Richmond Hill, Ont. Its collective agreement included a schedule setting out vacation entitlements for employees. Employees with one continuous year of services received two weeks’ vacation and at five years of service they received three weeks. A fourth week of vacation was added at 12 years of service and a fifth at 20 years.
The schedule also set out the process for a vacation schedule and allowing employees to indicate their preferred vacation dates in accordance with their seniority. There was no carryover to the next year and “any unpaid vacation monies will be paid out to an employee in the first pay period in December in each calendar year by a separate payment.”
In addition, the schedule stipulated that “the excess of the two-week mandatory vacation period allotment may be paid at the employee’s request on a onetime basis.”
Vacation time and vacation pay are interrelated but separate concepts for which employers have liability, says an employment lawyer.
Forced vacation
In 2022, La Rocca forced employees with more than five years of service to take vacation after they had already taken two weeks that year. The union filed a grievance in August alleging that this was a violation of the collective agreement. It argued that the agreement only allowed La Rocca to require employees to take the mandatory two weeks’ vacation; any vacation entitlement beyond that could be cashed out.
The union also argued that the ESA did not apply because the collective agreement provided a greater benefit for vacations than the ESA.
The ESA minimums for vacation entitlement are two weeks for employees employed for less than five years and three weeks for employee employed for five years or more. The vacation “must be completed no later than 10 months after the end of the vacation entitlement year for which it is given.”
The ESA also stipulates that no employer or employee can contract out of or waive an employment standard and, if one or more provisions in an employment contract “that directly relate to the same subject matter as an employment standard” provide a greater benefit than the employment standards, the contract supersedes the ESA.
La Rocca maintained that it had a management right under the collective agreement to schedule vacations in consideration of the “efficient operation of the business,” and require employees who were entitled to more than two weeks’ vacation to take the balance of their vacation entitlement during the calendar year. The company argued that the Ontario Employment Standards Act, 2000 (ESA), required employees who have at least three or more weeks of annual vacation to take at least three of those weeks in the calendar year.
Employers should consider the possibility of constructive dismissal when considering a change in how vacation time is earned, according to an employment lawyer.
Company said it needed to follow ESA
The company added that the vacations schedule in the collective agreement stated that employees had to take a minimum of two weeks’ vacation in any calendar year, and this was meant to provide a floor, not a ceiling, for the calendar year. It also argued that the collective agreement provided equivalent benefits to the ESA, not greater. As a result, the ESA applied and employees could only forego their vacation entitlement with the approval of the employer and the Director of Employment Standards, as outlined in the ESA.
The arbitrator noted that collective agreements must be interpreted according to the plain and ordinary meaning of their words and which express the intention of the parties. The plain and ordinary meaning of the vacation schedule in this collective agreement was that employees were only required to take two weeks of vacation in a calendar year – there was no imposition of an obligation to take more than two weeks, said the arbitrator.
The arbitrator noted that the vacation schedule referred to “the two week mandatory vacation period” and also provided for “any unpaid vacation monies will be paid out to the employee in the first pay period in December…” This showed that there was only a requirement to take two weeks and the parties contemplated employees not taking all of their vacation entitlement and cashing out the balance, said the arbitrator.
The arbitrator also found that the collective agreement allowed La Rocca to retain the discretion to schedule employees for vacation but did not say anywhere that it had the right to determine how many weeks an employee could take in a calendar year. Instead it specifically said that employees must take a minimum of two weeks’ vacation, which suggested that management’s right to schedule vacation did not extend to the point of requiring more than two weeks that were imposed by the collective agreement, said the arbitrator.
Different jurisdictions have different rules on whether employees can waive vacation entitlement, says a payroll expert.
Greater benefit
As for the application of the ESA, the arbitrator determined that the collective agreement provided a greater benefit. Although employees with less than five years of service received two weeks’ vacation and those with more than five years received three weeks – equal to the ESA – employees with 12 years of service received four weeks and those with 20 years received four weeks, which were greater than the ESA minimum. The collective agreement also allowed employes to change their vacation with written notice and to make vacation requests on short notice, while the ESA gives the employer the sole right to schedule vacations -also a greater benefits, said the arbitrator.
The arbitrator determined that La Rocca did not retain the right to require an employee with more than two weeks’ vacation entitlement to take more than two weeks in a calendar year, and the ESA did not apply because the collective agreement provided a greater benefit. The grievance was dismissed. See La Rocca Creative Cares v. United Food & Commercial Workers Canada, Local 175, 2023 CanLII 38446.
