Can Employees “Lose” or “Forfeit” Unused Vacation?

Vacation is not a “use it or lose it” benefit. Like wages, it is a protected benefit under the Employment Standards Act (ESA). The ESA has separate provisions for Vacation Time and Vacation Pay, but neither one can be taken away from an employee once it is earned

The only way an employee “loses” vacation TIME is if they quit/resign/are fired from a job and have not used the TIME they have earned.

Vacation PAY is earned on all wages including commissions, overtime and public holiday pay.  This calculation may result in an employee earning more vacation PAY than is needed for their time off. In such cases the extra vacation pay is owed to the employee and can be paid either at the time of the vacation or at another agreed-upon time (i.e. Christmas).

Employers can stipulate in the vacation policy that unused vacation can be carried over to the next year, and must be used by XX date (i.e. April 1) and if not, then the employee will be “sent’ on vacation at a time that is satisfactory to the employer.  (Yes you can force them off work in this situation).

It is also important to note that section 41 of the ESA states that the employee is not permitted to forgo (not use) vacation time unless they get written approval from the Director of the MOL.

Call us today for help with your Vacation Policy!

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