Vacation pay for employees returning from unpaid leaves | Including work on a holiday in overtime calculation
Vacation pay for employees returning from unpaid leaves
QUESTION: What are the vacation time and pay requirements for employees returning from a long-term, unpaid leave of absence, such as maternity or parental leave?
ANSWER: Vacation rules are governed by employment standards laws in each province and territory and under the Canada Labour Code for federally regulated workplaces.
Since an unpaid leave allowed under employment standards does not constitute a break in employment, the time off counts towards the employee’s length of service for determining annual vacation entitlement.
Some jurisdictions, such as Manitoba, Ontario, and Quebec, specify that employees on a leave of absence permitted by employment standards law may postpone their vacation to a later date.
For vacation pay, employees are entitled to receive a minimum percentage of the vacationable wages they earned during the year, depending on their length of employment.*
Therefore, an unpaid leave of absence would affect how much vacation pay the employer would have to pay.
For example, if an employee were on an unpaid leave for seven months, the employee would only have five months of vacationable earnings for the vacation year.
Employees off on an unpaid leave for an entire year would not have any vacationable earnings for the vacation year.
Employers are advised to carefully check the terms of their employment contracts and/or collective agreements and the wording in their vacation policy.
*Note: In most jurisdictions, employment standards law requires employers to pay employees four per cent or six per cent of their vacationable earnings, based on their length of service. In Saskatchewan, employers must pay either 3/52s or 4/52s of vacationable earnings, depending on the employee’s length of service. In Yukon, the requirement is four per cent of vacationable earnings, regardless of length of service.
Including work on a holiday in overtime calculation
QUESTION: If an employee works on a statutory holiday, should I include the hours worked when calculating any overtime pay owing to the employee for the week?
ANSWER: The answer depends on the jurisdiction in which the employee works since statutory holidays are covered by the Canada Labour Code (for federally regulated employees) and provincial/territorial employment standards laws, as the following table shows:
|
Jurisdiction |
Hours worked on holiday |
Hours worked on holiday |
|
Canada Labour Code |
|
x |
|
Alberta |
|
x1 |
|
British Columbia |
x2 |
|
|
Manitoba |
|
x3 |
|
New Brunswick |
|
x |
|
Newfoundland and Labrador |
x |
|
|
Northwest Territories |
|
x |
|
Nova Scotia |
x |
|
|
Nunavut |
|
x |
|
Ontario |
x4 |
x4 |
|
Prince Edward Island |
|
x5 |
|
Quebec |
x |
|
|
Saskatchewan |
|
x |
|
Yukon |
|
x |
1 This applies when employees work on a statutory holiday and are paid 1.5 times their wage rate for the hours worked.
2 If an employee earns statutory holiday pay and weekly overtime pay, the employer is not required to pay both. The B.C. Employment Standards’ Interpretation Guidelines Manual states that, “Where an employee earns two combined entitlements, they do not ‘double up’ but, rather, the employee would get paid in a fashion that provides the greater benefit to the employee.”
3 The Employment Standards Code is unclear on this issue. The employment standards department has informed us that its administrative policy for dealing with overtime in a week in which a statutory holiday occurs is as follows: If an employee works on a statutory holiday and receives premium pay for those hours, the hours worked are excluded from the overtime calculation; however, the hours paid for the statutory holiday are included. Employers are advised to contact the department if they have questions.
4 In Ontario, if an employee works on a statutory holiday and receives premium pay for those hours, the hours worked on the holiday are excluded from the overtime calculation. If an employee works on a statutory holiday and receives regular pay for those hours, along with a substitute day off work, the hours worked on the holiday are included for the calculation of overtime.
5 The P.E.I. Employment Standards Act does not specifically address this issue. However, we have received information from the employment standards department that its policy is to exclude statutory holidays (worked or not worked) when calculating overtime for the week in which a holiday occurs. For more information, please contact the department.
