This year has seen an unprecedented impact on the working lives of Canadians. As a result of travel restrictions, layoffs, and other changes, many employees were not able to use all of their annual vacation entitlement. Others, such as front-line workers, may have worked overtime or a lot of extra hours, which would increase the amount of vacation pay they earn. So, what happens to the vacation entitlement if it isn’t used?
When it comes to accrual-based vacation pay that aligns with Employment Standards minimums, employers are “required to ensure that” employees take at least their statutory time off (i.e. 10 or 15 days), at which time their accrued (banked) vacation pay would be paid out. This should happen within 10 months of the employee earning the vacation.
If you get to the end of the year, and some have still not taken vacation, you can do one of two things: pay out whatever vacation pay and time is “banked” and force them to take time off at a mutually convenient time, such as the Christmas holiday period; or carry over and the next year when they take time off, pay out their vacation pay (but not the time). You could mutually agree that they take the vacation over a holiday period that is appropriate to the person’s customs, if the company’s normal holiday times are not suitable.
Your company should create and implement a clear policy to state how the unused vacation will be dealt with.
Call us for help with your employee policies!