Vacation

 

A generous vacation policy—much like benefits —can help to make a company more desirable to potential candidates and existing employees. Many companies provide a vacation entitlement that is greater than the minimum required under employment standards legislation. These types of plans typically include an increase in vacation entitlement that is tied to the employee’s completion of years of service and/or previous work experience. When establishing your policy, it may make sense to talk to other business owners in the industry to determine the norm.

Scheduling vacation time

Scheduling vacation time is a challenge for many start-ups. It can be difficult to provide employees with well-deserved time off while juggling the demands of your operation. Many employers do their best to accommodate employees’ vacation requests. However, in the end, employers have the final say as to when an employee can go on vacation.

When scheduling vacation time, it may be advisable to:

• introduce a vacation-planning exercise where employees submit their vacation plans for the year
• determine blackout periods—days when vacations are not allowed
• define a vacation conflict list—individuals who cannot be off at the same time
• set clear vacation guidelines to keep conflicts to a minimum
• use the vacation planning process to define contingency plans 

The Employment Standards Act

The Ontario Employment Standards Act states that employees are entitled to two weeks of vacation time after each 12-month vacation entitlement year. Ordinarily, a vacation entitlement year is a recurring 12-month period that begins on the date of hire. However, employers may establish an alternative vacation entitlement year that begins on a date other than the date of hire. In this case, the employee is entitled to a pro-rated amount of vacation time for the period that precedes the alternative vacation entitlement year.

According to the Employment Standards Act:

• Employers must keep track of all vacation time earned and taken by each employee.
• Employers must compensate employees with at least 4% of their gross wages as vacation pay. Payment may be generated in one of four different ways:

1. as a lump sum prior to the employee’s scheduled vacation
2. on each pay cheque as agreed to in writing by the employee
3. as a lump sum at regularly scheduled intervals and as agreed to by the employee
4. as paid time off as agreed to by the employee in writing

• Employers cannot schedule vacation time in anything less than one week blocks, unless the employee makes a written request and the employer agrees to it in writing.
• Employers must ensure that the employee takes vacation time within 10 months following the completion of the vacation entitlement year. 

Note: The information above provides a summary only. It is not intended to be an exhaustive discussion of vacation requirements pursuant to applicable law and should not be taken as legal advice. Readers should review the full text of the Employment Standards Act and seek legal advice for more detail. If you are outside of Ontario, consult applicable employment standards legislation and seek legal advice with respect to your jurisdiction.

 

References

Your Guide to the Employment Standards Act, 2000. (n.d.). Retrieved March 3, 2009 from Ministry of Labour website, http://www.labour.gov.on.ca/english/es/guide.

Tags: compensation, retention