When Does Vacation Hours Start Again After Use
Vacation time and vacation pay explained
Employers should exist mindful of ESA requirements to avoid unnecessarily liability
When yous hear the discussion "vacation", what'south the start affair that comes to mind? Rest and relaxation?
Well, for many employers, the discussion vacation leads to anxiety. And, frankly, lots of defoliation.
Why? Because they cannot wrap their heads around the concept of vacation fourth dimension and holiday pay.
Although they are interrelated, they are ii split concepts.
The purpose of this post is to clarify the chief confusion relating to vacation time and vacation pay, so employers can balance assured.
Background
Employees in Ontario who are covered past the Employment Standards Act, 2000 (ESA) are entitled, at minimum, to ii weeks of vacation time after each 12-month vacation entitlement year. After five years of employment, that entitlement increases to three weeks.
Vacation pay is based on two per cent of the gross wages earned in the vacation entitlement year for each week of vacation.
These are simply the bare minimum requirements under the ESA and an employment contract or policy may provide a greater right or benefit to the employee, in which case the greater right or benefit would apply.
And so what is the departure between vacation time and vacation pay?
Vacation time
Vacation time is earned after each vacation entitlement year, whether it is a agenda year or an alternative year. For case, if the employee is new, they will starting time earning holiday time pursuant to the ESA once they accept completed 1 yr of service. However, the employer may allow the employee to accept holiday time before it is accrued, and that can be written into the contract or policy.
Employers are responsible for making certain an employee takes their statutory minimum holiday fourth dimension. Let'southward say you have a utilize-information technology-or-lose-it policy in the workplace and employees receive four weeks of vacation. Technically, you cannot impose "utilise it or lose information technology" for the statutory minimum holiday time of 2 or 3 weeks; the minimum holiday time must exist taken by the employee within 10 months post-obit the vacation entitlement year.
That said, any vacation time beyond the statutory vacation time tin can be lost if the employee does non take it within the time stipulated in the contract or policy. So for a new employee, you must ensure they have the 2 weeks of statutory minimum holiday time, and tin can impose a use-it-or-lose-it-policy for the additional two weeks beyond the ESA requirement.
Y'all can also crave the employee to take vacation at a sure fourth dimension during their vacation entitlement yr, although it seems counterintuitive. After all, isn't vacation supposed to be for the employee's do good? Yes, but some employers may be incentivized to brand it next to incommunicable for employees to take their allotted vacation time, which is why these minimum requirements exist. As an employer, even if your employee does not "want" to have their minimum holiday fourth dimension, yous take to ensure that they do.
Vacation pay
When information technology comes to vacation pay, information technology is earned on each paycheque equally the employee earns their wages, whether they are paid by the hour, salary or committee. In fact, one of the common costly mistakes employers make is to assume they do not accept to pay vacation pay on an employee's commissions.
Employees are entitled to the following vacation pay, at a minimum, under the ESA:
- 4 per cent of the gross wages earned, for employees with less than five years of service or
- 6 per cent of the gross wages earned, for employees with five or more years of service.
That said, employers tin cull when to provide vacation pay to employees:
- in a lump sum prior to the employee taking vacation time
- on each paycheque, if the employee agrees in writing or
- just providing paid holiday time and continuing an employee's salary while they take holiday, if the employee agrees in writing.
When employment ends, employees are entitled to all accrued and unpaid vacation pay, through to the stop of the applicable statutory discover menstruum.
Interaction with leaves
Somewhat counterintuitively, vacation time accrues while an employee is on an canonical leave of absenteeism. In other words, vacation time accrues during both active and inactive service.
Typically, when an employee is on a go out, the employer will crave the employee to take their accrued vacation time at the end of the exit and prior to returning to work. If the vacation fourth dimension is normally taken every bit unpaid, then the employer does not have to pay the employee as the employee did non earn wages since they were non working.
However, if the holiday time is ordinarily taken as paid, then the employee'due south salary should keep during the holiday.
Conclusion
It is important for employers to be mindful of the ESA requirements and provide employees with what they are entitled to. Holiday time and vacation pay are no exception. Otherwise, employers tin be exposed to unneccessary liability, and be on the claw to pay thousands of dollars in unpaid wages.
If the concepts of holiday fourth dimension and vacation pay seem complicated, know that you are not lone. Yet, it is not an excuse for non fulfilling your legal obligations. And so sympathise what it ways, comply with the ESA, and rest assured.
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Source: https://www.hrreporter.com/opinion/canadian-hr-law/vacation-time-and-vacation-pay-explained/363581
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