Standard time limits for paying an employee after resignation or firing
Question: Within what time period must an employee who gives two weeks’ notice receive vacation and severance pay? Normally our employees are given vacation pay once a year.
Answer: Generally an employer has to pay out all vacation accrued to the time of cessation of employment within a certain number of days of the employment termination.
The number of days does not depend on whether the employee quit or was dismissed. For example, under Ontario’s Employment Standards Act the employer must pay all wages (including vacation pay and severance pay) not later than “the later of seven days after the employment ends or the day that would have been the employee’s next pay day.”
However, an employer may pay severance pay in instalments with the written agreement of the employee or the approval of the Director of Employment Standards, Ministry of Labour. An instalment plan cannot exceed three years. If an employer fails to make a scheduled payment, all of the severance pay still owing to the employee becomes due immediately.
In Nova Scotia, the employer has 10 days after the employment relationship ends to pay out vacation pay. The amount of vacation pay that is payable may vary according to the length of the employee’s service. However, it is normally calculated as a percentage of the employee’s wages earned during the 12-month period for which the vacation is given. Moreover, when the employee is the one giving notice, the employer is obligated, upon the expiry of the notice (two weeks in the above scenario), to pay to the employee the full amount to which the employee is entitled.
Brian Johnston is a partner with Stewart McKelvey Stirling Scales in Halifax. He can be reached at (902) 420-3374 or [email protected].
Answer: Generally an employer has to pay out all vacation accrued to the time of cessation of employment within a certain number of days of the employment termination.
The number of days does not depend on whether the employee quit or was dismissed. For example, under Ontario’s Employment Standards Act the employer must pay all wages (including vacation pay and severance pay) not later than “the later of seven days after the employment ends or the day that would have been the employee’s next pay day.”
However, an employer may pay severance pay in instalments with the written agreement of the employee or the approval of the Director of Employment Standards, Ministry of Labour. An instalment plan cannot exceed three years. If an employer fails to make a scheduled payment, all of the severance pay still owing to the employee becomes due immediately.
In Nova Scotia, the employer has 10 days after the employment relationship ends to pay out vacation pay. The amount of vacation pay that is payable may vary according to the length of the employee’s service. However, it is normally calculated as a percentage of the employee’s wages earned during the 12-month period for which the vacation is given. Moreover, when the employee is the one giving notice, the employer is obligated, upon the expiry of the notice (two weeks in the above scenario), to pay to the employee the full amount to which the employee is entitled.
Brian Johnston is a partner with Stewart McKelvey Stirling Scales in Halifax. He can be reached at (902) 420-3374 or [email protected].
