The Labour Standards Code says that employers must give employees both vacation time and vacation pay.
Earning Vacation Time
Employers must give employees vacation time of two weeks after each period of 12 months of work. This increases to three weeks once an employee has completed 8 years of service with the employer. An employee earns his/her vacation time during the first 12 months of work and every 12 months after that. The employer must give the employee her vacation time within the 10 months following the 12 month earning period.
Taking Vacation Time
Employers decide when employees will take their vacation time. Employers must tell employees when their vacation will begin at least one week before it begins. Many employers let their employees choose when to take vacation time; however, the employer has the final say.
Employees who work full time must take vacation time. Employees who work less than 90 per cent of the regular working hours during the 12 months when they earned vacation can give up vacation time and just collect their vacation pay (see below for information on vacation pay). When an employee tells an employer in writing that the employee will give up vacation time, the employer must pay the employee their vacation pay no later than one month after the date the 12 month earning period ends.
Vacation Time May Be Broken
If the employer and employee agree, the vacation time may be broken into two or more vacation periods, as long as the employee receives her full two weeks’ vacation, or three weeks after 8 years, and the employee receives at least one unbroken week of vacation.
Earning Vacation Pay
Vacation pay is different than wages. Employers must pay employees, whether full time, part-time, seasonal, etc., vacation pay of at least 4 percent of gross wages. This increases to 6 percent of gross wages once the employee has completed 8 years of service with the employer.
An employee earns vacation pay during the first 12 months of work for an employer and every 12 months after that.
Paying Vacation Pay
An employer can pay vacation by:
- accumulating the vacation pay over the 12 month earning period and paying it out to employees at least one day before they take their vacation time - note an employee can request accumulated vacation pay earlier but the employer does not have to provide it until one day before the employee’s vacation
- adding the vacation pay to each cheque, or
- including the vacation pay in with the employee’s hourly rate, which would be paid in every pay cheque (in this case, the employer must ensure the employee’s rate of pay is at least minimum wage plus 4 percent, or 6 percent for employees after 8 years)
The employer must make it clear to each employee how they are being paid their vacation pay. The employer can do this, for example, by showing accumulated vacation pay on every pay stub, showing on the paystub that vacation pay is paid out with each pay, by having employees sign a clear statement acknowledging they are aware that vacation pay is included in their hourly rate of pay, or by stating on each paystub that vacation pay is included in the hourly rate of pay.
Employees do not earn wages when they take their vacation time. Vacation pay is intended to be the employee’s pay during his/her vacation time, even if the employee receives vacation pay on each pay.
If an employee’s job ends and the employee has accumulated vacation pay, the employer must pay the accumulated vacation pay within 10 business days after the employment ends
If there is a dispute and the employer cannot show vacation pay was paid, the employer will normally have to pay the vacation pay (see also information sheet on Records).
Employees Not Covered by the Rules
The rules on vacation time and vacation pay do not apply to the following employees:
- real estate and car salespeople
- commissioned salespeople who work outside the employer’s place of business, but not anyone with an established route
- a salesperson who sells mobile homes
- employees who work on a fishing boat
- employees who do domestic service for or give personal care to an immediate family member in a private home and are working for the householder
- employees who do domestic service for or give personal care in a private home and are working for the householder for 24 hours or less per week
- athletes while engaged in activities related to their athletic endeavour
Can an employer pay vacation pay on a weekly or bi-weekly basis?
Yes. However, where an employer wishes to pay on this basis, it must be clearly communicated to the employee and records need to be retained to substantiate this. The vacation pay should also be identified on the pay stub.
Does vacation pay and vacation leave entitlement apply to only full time workers?
No, vacation pay and vacation leave entitlement apply to full time, part time, casual and seasonal workers.
Do seasonal workers who have worked for the same employer for 8 years or more qualify for three weeks vacation and vacation pay at 6% of their gross wages, even though such employees may have worked only a few months out of each year for the employer?
Seasonal workers, if they return regularly every year and are never gone for more than 12 months, qualify for three weeks vacation after 8 years and vacation pay at 6% of their gross earnings during the year they earned their vacation.
What if an employee receives three weeks vacation, or more, under company policy even though the employee has not worked with the employer for 8 years?
If the benefits in place are more favorable than what the Code provides, the employee will be entitled to those benefits.
If you have any questions, please contact Labour Standards.