In pedantic lawyer fashion, first some disclaimers:
This article is specific to employees who are governed under BC’s Employment Standards Act (“ESA”). This information is not applicable to unionized workers (who are subject to their collective agreement), federally regulated workers (who are subject to the Canada Labour Code), or other categories of employees excluded under the ESA.
There are other entitlements to paid time off under the ESA (such as sick time and statutory holidays). This article just talks about vacation time, and is general in nature. Employees or employers looking for legal advice about their specific circumstances should contact us.
Under the ESA, employees have two separate entitlements:
Employees are entitled to vacation pay of 4% (after 5 consecutive days of employment) or 6% (for employees with more than 5 consecutive years of employment) of the employee’s total wages earned in the 12-month vacation entitlement year.
Under the ESA, “wages” includes salary, commissions, and money that is paid by an employer to an employee for work. It also includes money that is paid as an incentive and relates to hours of work, production or efficiency (which would include some types of bonuses).
Employees are entitled to 2-3 week’ vacation time, based on their length of service (employees with less than 5 years are entitled to 2 weeks, employees with more than 5 years are entitled to 3 weeks).
Employees must take their vacation time in the year it is accrued, and an employer has to permit employees to take it in periods of 1-2 weeks (but employers and employees can agree to have vacation time taken in smaller periods).
Vacation Pay and Time in Excess of the ESA
Of course, the ESA sets out the minimums, meaning employers can (and often do) provide additional vacation time to employees. Where employers provide additional vacation time and pay, they have a lot of discretion as to how that excess vacation is structured. For example, employees may be allowed to roll-over vacation time in excess of the statutory minimums.
The best practice is for employers to have a clear and detailed vacation policy that sets out vacation entitlements, the process for taking vacation, and any other expectations around vacation entitlements, and to ensure that policy is consistent with all employment contracts.
Can vacation time be rolled over year-to-year?
Statutory vacation time (meaning the 2-3 weeks employees are entitled to under the ESA) cannot be rolled over or paid out from year to year. Employees are expected to use that vacation time each year, and an employer can direct that they do so.
If vacation time is provided in excess of the ESA minimums, then this is up to the employer, and should be confirmed in the vacation or PTO policy. Employers can have a “use it or lose it” policy, can allow employees to bank unused time year to year (usually up to a prescribed limit), or can choose to payout unused vacation time.
Can employees take vacation time whenever they want?
No, although an employer should act reasonably in refusing vacation requests. Further, the employment contract or the employer’s vacation policy should address this (for example, an employer may require a certain amount of notice before approving vacation time).
Can employees take all of their vacation time at once?
Yes, an employer has to allow the employee to take their statutory vacation in periods of 1-2 weeks. However, an employee can request to take their vacation time in smaller chunks. For periods of time in excess of the statutory entitlements, this is up to the employer.
What happens to accrued vacation pay when an employee leaves their employment?
Regardless of whether an employee resigns, is terminated (with or without cause), or disappears to Timbuktu, they are entitled to be paid out any accrued vacation pay.
Can an employee and employer agree to take less vacation, in exchange for increased salary?
No – employers and employees cannot contract out of employment standards legislation requirements, even if they both want to. That includes choosing to try and roll over your vacation time, which would technically be non-compliant with the ESA.
Can an employer contact employees while on vacation?
Generally speaking, employers shouldn’t, and employees do not have an obligation to respond to employer inquiries while on vacation. Of course, there might be emergencies, or the role might require a degree of availability.
However, employers should be aware of newly implemented “right to disconnect” legislation in Ontario and other jurisdictions. While not currently the law in BC, this might be coming, and this would make it unlawful for employers to contact employees while on vacation (except in cases of emergency).
Contact us for advice on vacation entitlements!