The holiday season is quickly approaching and many people in Ontario are planning to take some well-deserved time off. Yet, with travel restrictions still up in the air, others are wondering whether it’s better to forgo their vacation time in the hopes of taking an extended trip at some point in the future. Many employees are wondering whether they can carry over vacation time or whether they will be forced to forfeit unused time.
This article will help you understand the basics of vacation time and vacation pay in Ontario, as well as answer the question, what happens if I don’t use my vacation time?
In Ontario, employees are entitled to both vacation time and vacation pay after they have been working for one year. After one year of employment, Ontario’s Employment Standards Act entitles employees to:
- Two weeks of vacation time and vacation pay of at least four per cent of their annual pay when they have less than five years of service;
- Three weeks of vacation time and vacation pay of at least six per cent of their annual pay when they have more than five years of service.
Under the Employment Standards Act, vacation time is accumulated during a “vacation entitlement year”. This is a 12-month period over which an employee earns their vacation. It is typically a recurring 12-month period following an employee’s first day, however, an employment contract may indicate that it is a 12-month period starting on a date other than the employee’s first day of work.
Employees must use their vacation within 10 months of the vacation entitlement year in which it was earned
The Employment Standards Act requires that employees use their vacation time within 10 months of the year in which it was earned. This means that an employee who started working on January 1, 2021, earns 2 weeks of vacation that must be used by October 31, 2022.
The above standards are the statutory minimum standards for vacation time and vacation pay in Ontario. Many employers choose to provide their employees with greater entitlements in their employment contracts. For example, many employers will offer more time off and allow their employees to take vacation within their first year of employment—this helps attract and retain top talent!
The Employment Standards Act requires that employees take their vacation time within 10 months of the end of the vacation entitlement year in which it was earned. This means that vacation time cannot be carried over. Keep in mind that this only applies to vacation time mandated by the Employment Standards Act. Extra vacation time is subject to the terms of an employee’s contract and the employer’s vacation policies.
Employees who have not taken their vacation time in the 10-month period required by the Employment Standards Act must be paid out for their vacation.
Employers are responsible for ensuring that employees take their vacation time within the timeframe required by the Employment Standards Act. If an employee is not taking or is refusing to schedule their vacation, employers may schedule the employee’s vacation. The employer must schedule this vacation in one or two-week blocks unless the employee otherwise agrees.
If employees receive vacation time over and above the statutory minimum, this time may be carried over
As stated above, employers may give more vacation time and vacation pay than is required by the statutory minimum. Employers may allow employees to carry over vacation time that is over and above the statutory minimum. This means that employees may be allowed to carry over some of their vacation time. This will depend on the terms of their vacation policy in their employment contract.
Many employers have a ‘use it or lose it’ policy that requires employees to forfeit unused vacation time after a certain period. Employees and employers should review policies and agreements for carryover caps and other limitations before assuming that vacation time will be carried over.
Upon termination, employers must pay employees for earned but unused vacation time. Similarly, if an employer allows an employee to take vacation time and vacation pay before it is earned, the employee may have to pay back any such advance. If an employee is entitled to termination notice or termination pay, they are also entitled to vacation pay that accumulates during the notice period.
With all of this in mind, it is a good idea to check your employment contract to ensure that you fully understand your vacation entitlement and your employer’s vacation policies.
If you have any questions about your entitlements to vacation time or vacation pay, the experienced employment lawyers at Grossman Gale Fletcher Hopkins LLP in Toronto can help advise you of your rights.
At Grosman Gale Fletcher Hopkins LLP, our employment lawyers have a deep understanding of labour and employment matters. We have drafted, reviewed, and edited thousands of employment contracts and advised both employers and employees on their rights in the workplace, including rights related to vacation time and vacation pay. Contact us online or at 416.364.9599 to speak with one of the knowledgeable labour and employment lawyers on our team.
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