Be mindful of labour standards rules
The minimum amount of time an employee takes for vacation each year is governed by labour standards law. All Canadian jurisdictions require employers to give employees a minimum number of weeks of paid vacation every year. In most provinces and territories, employees are entitled to two weeks of paid vacation, which increases to three after a certain number of years of employment. Ontario, Saskatchewan and Yukon are the exceptions.
In Ontario and Yukon, the minimum stays at two weeks regardless of the number of years an employee works for an employer. In Saskatchewan, the minimum is three weeks, increasing to four weeks after 10 years.
Of course, employers may provide employees with more vacation than the minimums under the law.
To earn a vacation, employees generally have to work for their employer for a continuous period of 12 months. Some jurisdictions use an employee’s date of hire for the 12-month period and some use a specific 12-month calendar period. Many jurisdictions also allow employers to set up their own vacation entitlement year as long as it does not reduce an employee’s legislated vacation (time and pay) entitlements.
Many employers allow employees to request specific vacation periods. Others assign vacation times or require vacations during an annual business shutdown. Employers that allow requests still have the final say.
However, when reviewing a vacation request, employers must follow labour standards rules. All jurisdictions have set deadlines for when employees must take their legislated vacation after the end of the year in which they earn it. The timeframe varies from four months to 12 months, depending on the jurisdiction.
If an employer and an employee cannot agree and the employer selects the vacation date, the employer must give the employee advance notice of the vacation. The amount of notice varies, depending on the jurisdiction. For instance, Quebec and Saskatchewan require four weeks’ notice, while in Alberta, Manitoba and Newfoundland and Labrador, two weeks is specified. In the Maritime provinces, one week is required. Some provinces, such as Ontario and B.C., do not specify a timeframe.
Some employers allow employees to take paid vacations before they earn them. This can be a problem for employers if an employee’s employment ends before earning the vacation time.
Employers that allow advance vacations should have a clear policy that explains the rules, including situations where an employee leaves employment before earning the vacation time taken. Employers with policies that require repayment of advance vacations must make sure they comply with labour standards rules regarding deductions from employees’ pay.
While some employees and employers may assume employees can take their vacation in whatever manner they or the employer would like, this is not necessarily the case. Many jurisdictions have rules covering how employees can take the minimum period of vacation to which they are entitled under labour standards. This is especially relevant when it comes to taking vacation time in days rather than weeks.
Jurisdictions generally require that vacations be taken in an unbroken period of at least one week. Many allow employees to take vacation time in days instead of weeks, but only if the employee requests it, not the employer.
For example, in Ontario, employees may take their vacation in one two-week period or in two periods of one week each. They can also take their vacation in days rather than weeks, but only if they request it in writing and the employer approves it.
For any weeks beyond the two-week minimum, "an employer is free to schedule those excess weeks as it sees fit (e.g., as single days)," says the Ontario Employment Standards Board in its Policy & Interpretation Manual.
Ontario also has rules for how employees can take days off during the "stub" period. Ontario law considers a standard vacation entitlement year to be a recurring 12-month period that begins on the date an employee is hired. However, it allows employers to have a different vacation entitlement year (such as a calendar year). If an employer does so, the period between the end of the standard vacation entitlement year and the start of the employer’s vacation entitlement year is called the "stub" period.
Under Ontario law, employees entitled to two to five days of vacation for the stub period must take the time in consecutive days. If the period is more than five days, they must take the first five days consecutively and take the remaining days either with the first five or in a separate period of consecutive days. Employees can take the time in shorter periods than this, but they must request it in writing.
Foregoing, deferring vacations
To ensure employees take vacation time, labour standards laws either prohibit employees from waiving their entitlement to a vacation or put restrictions on the waiver. In Alberta and British Columbia, for example, vacation waivers are not allowed.
"Neither an employer nor an employee may waive the statutory entitlement to annual vacation. Failure to grant an annual vacation is a contravention of the act even if vacation pay is paid out," says the B.C. Employment Standards Branch’s Interpretation Guidelines Manual: British Columbia Employment Standards Act and Regulations.
Quebec also prohibits waivers unless allowed by a collective agreement or a decree. It also makes an exception for employees who work for a business that closes for two weeks for an annual vacation if the employee is entitled to at least three weeks’ vacation. In that case, the employee may request the employer waive the third week and, instead, pay the vacation pay owing.
Other jurisdictions, such as the Northwest Territories and Ontario, allow employees to forego their vacations, but only if the employer agrees and they obtain written approval from the employment standards board. The waiver only applies to current vacation entitlements, meaning an employee cannot agree to waive vacation for future years.
"Under the act, an employee’s right to vacation time is earned through completion of a stub period or vacation entitlement year. An employee cannot therefore agree to forego the vacation entitlement in any stub period or vacation entitlement year until the completion of that stub period or vacation entitlement year," the policy manual says.
In Nova Scotia and Prince Edward Island, part-time employees are allowed to waive their vacation entitlement if they work less than 90 per cent of their employer’s regular working hours in any continuous 12-month period.
In all cases where an employee foregoes their vacation, they are not giving up their right to vacation pay — employers must still pay it within the required time.
Some jurisdictions have rules covering the deferral of vacations for employees on a leave of absence. In Quebec, employees taking family or parental leaves, reservist leaves or leaves for sickness, accident or organ donation may ask to defer their vacation to the following year if they are off work at the end of the 12-month period by which they must take their vacation. It is up to the employer to decide whether to allow the request. If it says no, it must pay the vacation pay owing.
In Ontario, employees who are on leaves allowed under the Employment Standards Act, 2000 may defer their vacation if the 10-month deadline for taking the two-week vacation required by law comes while they are on leave. Employees may take the vacation as soon as their leave ends or, if they and their employer agree, at a later date.
The act also allows for deferrals for employees on leave who work under an employment contract that restricts or forbids vacation deferrals. The policy manual says this could be the case if an employer provides more than the legislated minimum of two weeks’ vacation, but has a "use it or lose it" policy that requires employees to take the extra vacation weeks by a certain date every year (such as Dec. 31).
To ensure employees who are on leave when the deadline comes do not lose their vacation entitlement or have to give up some of their leave, the act allows employees to defer the vacation until their leave ends or, if they and their employer agree, to a later date.
It is essential payroll and HR departments keep up-to-date and detailed records, with documents that show each employee’s entitlement to vacation, vacation requests and approvals, vacation dates and duration, vacation pay owing and paid and whether an employee deferred or waived a vacation, as well as written agreements/approvals for the deferral or waiver.
Payroll and HR should periodically review vacation policies and records and compare them against labour standards requirements in all of the jurisdictions in which they operate to make sure they are complying with the law. It is better to find and correct a problem before a labour standards board comes calling.