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Employees can lose their vacation time by failing to
take vacation BUT employees cannot lose their vacation
pay. This is often misunderstood. Many employers have a
"use it or lose it" policy with respect to vacation. But
this simply means that an employer can require an employee to take
vacation time or lose the vacation time but this does not alleviate
the employer's obligation to pay that employee the vacation
time. For example, when a salary worker who is entitled to 2
weeks' vacation time per year but fails to take the 2
weeks' vacation time, and his/her employer does not force
him/her to take the vacation time, the employer is required to pay
the employee an extra 2 weeks' pay.
Ontario's Employment Standards Act, 2000
("ESA") provides a minimum
entitlement of 2 weeks' vacation time to all workers to be paid
at 4% of gross wages. Employers and employees can agree to more but
not less. Some employed persons are exempted from the ESA such as
some qualified or registered practitioners (for example,
architects, lawyers, accountants, dentists, massage therapists,
pharmacists, and others).
Vacation TIME –
minimums under ESA
How Much
Deadline for Taking
Vacation
What time away from work is
included?
Foregoing
Vacation
Scheduling Vacation
Time
2 weeks upon completion of every 12-months
from date of hire
If employer establishes an alternative vacation entitlement
year, employee is entitled to 2 weeks vacation time after each
alternative vacation year plus a pro-rated amount of
vacation time for the "stub period"
(preceding the start of the first alternative vacation entitlement
year)
Earned vacation time must be taken with 10
months following completion of the vacation
entitlement year or stub period
Employer has the right to schedule the vacation time as well as
an obligation to ensure the vacation time is scheduled before then
end of the 10 month period
layoff
sickness/injury
leaves of absence under ESA
any other approved leaves
Employee can give up some or all of his/her earned vacation
time BUT the employer must
still PAY the employee vacation pay
in other words, you may lose your vacation time if you fail to
take the vacation time within the time required to do so, BUT the
employer must still pay the employee for the vacation time not
taken
Employers are required to schedule vacation time in blocks of 1
week or 2 weeks unless the employee and
employer agree in writing to schedule shorter periods.
Vacation time earned for Stub Period is calculated as single
days. If vacation time earned is 2 to 5 days, the vacation days
must be taken consecutively unless agreed otherwise
Vacation PAY – minimums
under ESA
How Much
When to Pay
End of
Employment
Vacation Records
A minimum of 4% of gross wages
Gross wages include:
regular earnings
commissions
bonuses/gifts
overtime pay
public holiday pay
termination pay
allowances for room and board
Gross wages do not include:
vacation pay
tips/gratuities
discretionary bonuses/gifts
expenses and travelling allowances
living allowances
benefit contributions/payments
federal employment insurance benefits
severance pay
Must be paid to employee in a
lump sum sometime before he/she takes the vacation
time earned EXCEPT:
vacation time is taken in periods of less than 1 week –
employee must be paid vacation pay on or before the payday for the
period in which vacation falls
when employee has agreed in writing that his/her vacation pay
will be paid on each pay cheque as it accrues (employee's wage
statement must clearly show amount of vacation being paid)
when employee and employer agree in writing otherwise
if employer pays the employee wags by direction deposit into an
account at a financial institution (employee must be paid vacation
pay on or before the payday for the4 period in which the vacation
falls)
Employee is entitled to be paid vacation pay earned but not yet
paid
Vacation pay is payable on termination pay but not severance
pay
Unpaid vacation pay must be paid either within 7 days of the
employment ending or on the next regular pay day
Employees may request a statement of employer's vacation
records and employers are required to provide the statement no
later than 7 days after the request or the 1st pay day
after the employee makes the request, which is later.
VACATION RECORDS
Record Details
Request for
Statement
Requests
Deadline
Current Vacation
Entitlement
Exception
Employers must keep records of:
vacation time earned
vacation time taken
balance of vacation time remaining
vacation pay paid and how it was calculated
Employees may request in writing a
statement of the employer's vacation records,
Employer required to provide information statement with respect
to each vacation entitlement year or stub period only
once
Employer must provide vacation
statement to employee within 7 days after the request or
the 1st pay day after the request, which is later
Employer must provide vacation
statement to employee within 7 days after the start of the next
vacation entitlement year or the 1st pay day after the
stub period or vacation entitlement year ends, whichever is
later
If the employee has agreed that
vacation pay will be paid on each pay cheque as it is earned, the
employer does not need to keep separate records or provide
statements (but the vacation amount paid must be clearly set out on
each pay cheque)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.