If you are an employee working in a federally regulated industry or workplace, such as a bank, airline, or postal and courier services, your annual vacation and vacation pay entitlements are pursuant to Division IV of the Canada Labour Code (the “Code”). The Code only applies to employees in federally regulated industries or workplaces. If you work in a provincially regulated industry, please see Vacation Pay and Entitlements in British Columbia | Ascent Employment Law.
Section 184 of the Code provides that employees are entitled to vacation with vacation pay of:
- at least two weeks if they have completed at least one year of employment;
- at least three weeks if they have completed at least five consecutive years of employment with the same employer; and
- at least four weeks if they have completed at least 10 consecutive years of employment with the same employer.
Where an employee is entitled to two weeks, the employee is entitled to 4% of their annual wages. Where an employee is entitled to three weeks, the employee is entitled to 6% of their annual wages. Finally, where an employee is entitled to four weeks, the employee is entitled to 8% of their annual wages (s. 184.01).
We ought to consider how wages are calculated for the purpose of vacation pay. The Code defines wages as including “every form of remuneration for work performed but does not include tips and other gratuities.” However, there are certain payments that are not a “form of remuneration for work performed”, but are wages for the purposes of calculating vacation pay, including: vacation pay; general holiday pay; bereavement leave pay; pay to an employee on a leave of absence awaiting the employer’s decision regarding maternity-related reassignment and leave; and pay to an employee who is required to remain available at the workplace during the 30-minute unpaid break.
Notably, tips and gratuities, reimbursement for work-related expenses, severance pay, and compensation for unjust dismissal, among other forms of payment, are not considered as wages for the purpose of calculating vacation pay.
For a thorough list of payments that are considered as wages for the purpose of calculating vacation pay, see Vacation pay – IPG-012 – Canada.ca.
Vacation pay under the Code is to be taken in only one period. However, it may be taken in more than one period if the employee makes a request in writing and the employer approves it in writing (s. 184.1).
If a general holiday falls under the vacation granted to an employee (e.g. New Year’s Day, Good Friday, Victoria Day, Canada Day, Labour Day), the vacation to which the employee is entitled may be extended by one day for each such holiday, and the employer shall pay to the employee, in addition to the vacation pay, the wages to which the employee is entitled for those general holidays (s. 187).
Vacations may also be interrupted for a leave of absence, with written notice to the employer, including for leaves for maternity, parental, compassionate care, critical illness, personal, court or jury duty, bereavement, medical, and work-related illness or injury, among other forms of leave (s. 187.1).
If you are an employee or employer in a federally regulated industry with questions on annual vacation and vacation pay, contact us for a consultation. We want to help!
