Canadian Payroll Reporter - sample

6 Canadian HR Reporter, a Thomson Reuters business 2017 News time each year, usually two or three weeks, depending on their years of service and the jurisdic- tion in which they work. Within a specified number of months of earning the vacation, employers must provide em- ployees with the vacation time and pay them either four per cent or six per cent of their "va- cationable" earnings, depending on their years of service and the jurisdiction in which they work. However, it is in the details that vacation requirements can get complicated. Which earn- ings are included when calculat- ing vacation pay? Is there a dead- line for paying it? Can employees skip vacation? What happens if employees take an unpaid leave or their employment terminates? For employers operating in more than one jurisdiction, it can be even more complicated. Annie Chong and Elle Stu- art are part of a four-member Payroll Consulting Group team that runs a telephone hotline for subscribers to Carswell's payroll manuals at Thomson Reuters. The team also teaches courses for the Canadian Payroll Asso- ciation. Stuart said that while the con- sultants get calls about vacation rules throughout the year, they notice an increase in the spring and summer, which she suspects is due to more employees taking vacations then. "I think a lot of practitioners get overwhelmed with the rules surrounding vacation," she said. One of the most common vacation questions concerns rules for providing vacation to employees who have returned to work after taking an unpaid leave of absence, said Stuart. "We have payroll practitioners calling and asking us, 'We have an employee who went on mat leave and just came back. What do we do with their vacation? What's the law?'" she said. "A lot of them think that even though you were on mat leave, we are supposed to pay you for the vacation that you have ac- crued for the year. I always say it depends on their contract of employment or their company policy." She said this is important be- cause payroll departments have to ensure that vacation pay for employees returning from an unpaid leave complies with both employment standards mini- mum requirements and the em- ployer's vacation policy. While employment standards laws in many jurisdictions re- quire that employees continue to accrue vacation time during an unpaid leave, the fact that the employer is not paying them during the leave can affect the amount of vacation pay owing. For example, an employee who is off work for eight months in a year will only have four months of vacationable earnings for that year. An employee who is on an unpaid leave for a full year will not have any vacationable earnings for the year. "If you are not paying any va- cationable earnings while they are on leave, four per cent of zero is going to be zero. The employ- ee will still accrue the vacation time, but they are just not going to be paid for it," said Stuart. An important exception arises if a collective agreement, employment contract or com- pany vacation policy states that employees be paid their regular salary while they are on vacation, rather than a percentage of their vacationable earnings. "For salaried employees, it is very common for organizations to (pay) an employee's regular salary when they go on vaca- tion," said Chong, manager of the group. "For example, next week, if I'm on vacation, Carswell will continue to pay my regular sal- ary, as opposed to an hourly employee, where you would take what they've earned and calcu- late four per cent or six per cent, depending on their entitlement, and that's what you pay them during that week that they are on vacation." "If your policy allows your employees to take vacation and be paid their regular salary, then the idea is that when you come back from your mat leave, if you are entitled to three weeks, you should provide that employee with three weeks' time off with three weeks' full salary. "That's a huge challenge in dealing with vacations. I hear that a lot when I teach courses. The hourly folks, the contract employees, those are easy to manage. They are pretty straight- forward — if you don't work, you don't get money," said Chong. To avoid having to pay regu- lar salary during vacation for an employee returning from an unpaid leave, Chong advised that company vacation policies, employment contracts or col- lective agreements clearly state that employees who take unpaid leaves will not accrue vacation- able earnings while on the leave and will, therefore, not be paid their regular pay when they take vacation afterwards. Another common question Stuart said she gets is whether employers can have a "use it or lose it" policy for vacations, meaning that if employees do not take their vacation by a certain date, they forfeit it for that year. She said she always reminds callers that employees can never lose the legislated minimum amount of vacation to which they are entitled under employ- ment standards. Workers must take the vaca- tion within a certain period after earning it. The time frame varies depending on the jurisdiction, but is commonly within 10 or 12 months of earning the vacation. "The organization has to en- sure that employees take their vacation. You are going to have people who are work keeners who don't want to take any vaca- tion time, but the employer has a responsibility to ensure that all employees take vacation," said Chong. Employers can do this by scheduling vacations for work- ers who are not taking them and informing them that they are re- quired by law to take the time off. If, for some reason, an em- ployee does not take their va- cation, the employer must still pay the minimum amount of vacation pay under employment standards. "Anything legislated by em- ployment standards is always protected and it's not touchable by the employer," said Stuart. If employers provide employ- ees with vacation that exceeds employment standards mini- mums, employers may be able to apply a use-it-or-lose-it policy to the excess vacation, depending on the wording of their collective agreement or vacation policy. "Employers are definitely al- lowed to call the shots with re- spect to the excess vacation they grant to their employees; how- ever, it has to be very clearly out- lined in their company policy," Stuart added. She said a related question from some callers is whether em- ployees have the right to forfeit their vacation for a given year. "That would depend on the ju- risdiction," Stuart said. "Some ju- risdictions are very strict and say absolutely not and this, again, pertains to the legislated vaca- tion. Whereas other jurisdic- tions might give you a little more leeway and say that you are able to waive it, but you have to get permission from the director of employment standards." Even in jurisdictions that al- low employees to waive their vacation entitlement, the waiv- er does not affect their right to be paid for the vacation. This means that employers must still follow vacation pay rules. When it comes to vacation timing, Stuart said some em- ployers are not aware that they can choose when an employee takes vacation, as long as it is within the time specified by em- ployment standards and, where required, they give employees advance notice of the dates. "If an employer wants to shut down their business for a week for Super Bowl, they can get their employees to take their vacation during that time," said Stuart. Note: A secondary article on this topic, to be published in an upcoming issue, will address vacation pay, the importance of doing annual vacation pay rec- onciliations, and keeping proper vacation records. Details of requirements can be complicated from VACATION on page 1 June 2017 | CPR It is common for organizations to continue paying salaried employees when they are on vacation.

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