Unearned vacation time

Question: In Ontario, if an employee who has taken vacation time she has technically not earned and resigns, is the company allowed to deduct that unearned vacation time from her last pay?

Answer: Under the Ontario Employment Standards Act, 2000 an employer cannot make any deductions from an employee’s wages unless the employee has given written authorization to do so. In order for it to be valid the employee’s authorization must refer to a specific amount or provide a formula from which a specific amount may be calculated. Therefore, without a specific authorization from the employee directing the employer to deduct unearned vacation time from her wages, the employer is not entitled to make such a deduction.

In these circumstances, the employer’s remedy would be to seek recovery of its overpayment to the employee by bringing a small claims court action. But it is likely the cost of commencing such an action in terms of time and court fees would greatly exceed the amount of the claim itself.

Peter Israel is counsel to Goodman and Carr LLP in Toronto and is head of the firm’s Human Resource Management Group. Peter can be reached at [email protected] or (416) 595-2323.

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