Employee Rights & Obligations Concerning Vacation Time
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Now that the end of the year is within sight, many employees across the province are examining the vacation time they have remaining in 2019 and making plans to use it before the end of the year. Given that many people have getaways on the mind leading up to and during the holiday season, it’s an opportune time to provide an overview of vacation entitlement in Ontario.

How Much Time Are Employees Entitled To Each Year?

Under provincial employment legislation, set out in the Ontario Employment Standards Act (ESA), employees have minimum entitlement with respect to both vacation time and vacation pay. It is important to note that some occupations and professions are excluded from coverage under the ESA, including:

  • Secondary school and post-secondary students working in co-operative programs authorized by their school board or school;
  • Police officers (with the exception of  lie detector sections in Part XVI of the ESA;
  • Politicians, judges, religious officials or elected trade union officials; and
  • Employees whose jobs are regulated by federal employment laws and standards.

The majority of employees in Ontario will be entitled to the minimums set out in the ESA, which states that employees with less than five years of service are entitled to two weeks of vacation time for each 12-month period of employment (otherwise referred to as an entitlement year). For any period of employment before the start of a full entitlement year (called the “stub period”), the vacation time earned during that period will be pro-rated. For example, if an employee were to begin work with an employer six months before the end of the entitlement year, they would be entitled to one week of vacation time during that period. Employees with over five years of service are entitled to three weeks’ vacation per entitlement year.

Of course, there is nothing stopping employers from going above and beyond the minimums set out in the ESA. So long as the minimums are being met, employers are free to offer additional vacation time as an enticement to attract prospective employees or as a reward for long-time or more senior employees.

Vacation Pay Entitlements

Rather than providing employees with vacation time, employers may instead provide vacation pay. This is especially common in part-time and contract or temporary roles. In this case, the ESA sets the minimum vacation pay requirements as follows:

Vacation pay must be at least four per cent of the gross wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or stub period (where that applies) for employees with less than five years of employment. Employees with five or more years of employment at the end of a 12-month vacation entitlement year or stub period (if any) are entitled to at least six per cent of the gross wages earned in the 12-month vacation entitlement year or stub period.

Unused Vacation Time

Many employees will find that their employers will begin to send out reminders about unused vacation time as early as midway through the year. This is because of the obligation on employers to provide vacation pay in lieu of unused vacation days. Therefore, any unused days within the year must instead be paid out, which in turn affects the employer’s annual budget, particularly in large organizations where unused days can add up to a significant sum.

In the alternative, employers may allow employees to carry unused days forward to the following year, increasing the number of days the employee can take the next year. Some employers will allow for this, while others will not. The reason for this is likely for the benefit of the employees, despite the fact that some employees may find this frustrating. Many employers believe that employees derive a significant benefit from taking time off each year, and do not want their employees to hoard vacation time at the expense of their own well-being.

Employers also have a third option available to them with respect to employees who are not using their full vacation entitlement. Rather than paying them for the time or allowing a rollover, employers are also permitted under the ESA to schedule vacation time on behalf of an employee who has not used all of their days. New or prospective employees should be sure to check their employer’s vacation policies to see how vacation is handled beyond the minimum ESA standards so that they can plan accordingly.

At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems you may encounter in the workplace. The highly skilled Toronto employment lawyers at Baker & Company can review your employment policies and/or contracts and ensure that you are meeting your legal obligations while addressing and mitigating risk. Protect yourself, your workplace, and your employees. We rely on our broad base of experience and expertise to provide clear, pragmatic legal advice, and representation in litigation.  Call us at 416-777-0100 or contact us online for a consultation.

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Toronto, Ontario, Canada
M5H 3P5

Phone: 416-777-0100
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