Does an employee on temporary layoff accumulate vacation and service time?
Question: Does an employee on temporary layoff accumulate vacation and service time? If so, can the employee sign a release agreeing to forego them during the layoff?
Answer: The answer to the first question depends on the laws of the applicable jurisdiction and any negotiated terms. As for the second question, if the entitlement is statutory, the answer is no.
Vacation time
The manner in which employees accumulate vacation time is calculated differently depending on the jurisdiction. For example, some jurisdictions require the employee to work a certain number of months in the year or a certain percentage of normal working hours in the year to maintain vacation entitlement.
As such, whether an individual employee’s vacation entitlement will be affected by a period of layoff depends on a combination of factors, including the particular jurisdiction, the employee’s length of service and the amount they have worked over a particular period.
For example, in New Brunswick, vacation entitlements for an employee with less than eight years’ service is the lesser of two weeks’ vacation or one day for each calendar month worked. Thus, depending on the length of layoff, there may not be any impact on vacation entitlement. For example, where an employee with four years’ service is laid off for less than two calendar months (they work for 10 months of the year), they still would be entitled to 10 vacation days.
Conversely, in Newfoundland and Labrador, an employee who has worked less than 90 per cent of the regular working hours for the year is not entitled to vacation time (but is still entitled to vacation pay). In Saskatchewan, an employee is not entitled to vacation if they are laid off for a period of 26 weeks or more; otherwise, their vacation entitlement remains unchanged. In Alberta, the employer may reduce the employee’s vacation in proportion to the number of days the employee would normally have been scheduled to work but did not.
Service time
Whether an employee will continue to accumulate service time over a period of layoff will depend on the duration of the layoff and may be affected by the terms in any applicable employment or collective bargaining agreements.
Generally, employment standards legislation sets out a prescribed period of time that an employee may be temporarily laid off. The permissible period may be further impacted by employment or collective bargaining agreements. If the employee is recalled within the prescribed period, employment is considered continuous and the employee will have accumulated service time for the period spent on layoff. However, if the layoff exceeds the prescribed period, the employment relationship can be considered at an end.
For example, in Newfoundland and Labrador, a temporary layoff may not exceed 13 weeks in a 20-week period or else it will be deemed a termination (subject to a recent change to account for COVID-19 extending the 13 weeks to 26 and the 20 weeks to 33). Ontario and British Columbia have extended the time period for temporary layoffs in response to the COVID-19 pandemic; Ontario now allows a layoff to be extended to 35 weeks in any period of 52 consecutive weeks in certain cases, while B.C. now allows for a layoff of up to 16 weeks in a 20-week period. In some provinces, including Alberta and Ontario, the period of temporary layoff may be extended if the employer continues the employee’s benefit plans.
Release
Employment standards legislation is reflective of the minimum entitlements in each jurisdiction and generally cannot be contracted out by requesting that the employee forego their vacation time. However, in some jurisdictions, legislation may allow an employee to elect to give up their vacation time and only collect vacation pay.
For example, a federal employee is entitled to waive their annual vacation entitlement by written agreement with the employer. In Ontario, the director of employment standards must also agree before an employee can give up vacation time. In Nova Scotia, employees who have worked less than 90 per cent of the regular working hours during the year may elect to take vacation pay instead of vacation time.
In any event, it is important to remember that employers have a general right to dictate when employees take vacation. Generally, employers may require employees to take any unused vacation before commencing a period of layoff, subject to any restrictions set out in employment or collective bargaining agreements.
However, employees cannot sign a release foregoing the accumulation of service time during the permissible layoff period, as minimum standards legislation considers employment continuous during this time.
Brian Johnston, Q.C., is a partner with Stewart McKelvey in Halifax. He can be reached at (902) 420-3374 or [email protected].
