Canadian Payroll Reporter

5 Canadian HR Reporter, a Thomson Reuters business 2018 Vacation pay for employees returning from unpaid leaves QUESTION: What are the vacation time and pay requirements for employees returning from a long-term, unpaid leave of absence, such as maternity or parental leave? ANSWER: Vacation rules are governed by employment standards laws in each province and territory and under the Can- ada Labour Code for federally regulated workplaces. Since an unpaid leave allowed under em- ployment standards does not constitute a break in employment, the time off counts towards the employee's length of service for determining annual vacation entitlement. Some jurisdictions, such as Manitoba, Ontario, and Quebec, specify that employ- ees on a leave of absence permitted by em- ployment standards law may postpone their vacation to a later date. For vacation pay, employees are en- titled to receive a minimum percentage of the vacationable wages they earned dur- ing the year, depending on their length of employment.* Therefore, an unpaid leave of absence would affect how much vacation pay the em- ployer would have to pay. For example, if an employee were on an unpaid leave for seven months, the employ- ee would only have five months of vacation- able earnings for the vacation year. Employees off on an unpaid leave for an entire year would not have any vacationable earnings for the vacation year. Employers are advised to carefully check the terms of their employment contracts and/or collective agreements and the word- ing in their vacation policy. *Note: In most jurisdictions, employment standards law requires employers to pay employees four per cent or six per cent of their vacationable earnings, based on their length of service. In Saskatchewan, employers must pay either 3/52s or 4/52s of vacationable earnings, depending on the employee's length of service. In Yukon, the requirement is four per cent of vacationable earnings, regardless of length of service. CPR | August 2018 ASK AN EXPERT Annie Chong MANAGER OF CARSWELL'S PAYROLL CONSULTING GROUP annie.chong@thomsonsreuters.com | (416) 298-5085 ANSWER: The answer depends on the ju- risdiction in which the employee works since statutory holidays are covered by the Canada Labour Code (for federally regulated employ- ees) and provincial/territorial employment standards laws, as the following table shows: Including work on a holiday in overtime calculation QUESTION: If an employee works on a statutory holiday, should I include the hours worked when calculating any overtime pay owing to the employee for the week? Jurisdiction Hours worked on holiday included when calculating overtime Hours worked on holiday excluded when calculating overtime Canada Labour Code x Alberta x 1 British Columbia x 2 Manitoba x 3 New Brunswick x Newfoundland and Labrador x Northwest Territories x Nova Scotia x Nunavut x Ontario x 4 x 4 Prince Edward Island x 5 Quebec x Saskatchewan x Yukon x 1 This applies when employees work on a statutory holiday and are paid 1.5 times their wage rate for the hours worked. 2 If an employee earns statutory holiday pay and weekly overtime pay, the employer is not required to pay both. The B.C. Employment Standards' Interpretation Guidelines Manual states that, "Where an employee earns two combined entitlements, they do not 'double up' but, rather, the employee would get paid in a fashion that provides the greater benefit to the employee." 3 The Employment Standards Code is unclear on this issue. The employment standards department has informed us that its administrative policy for dealing with overtime in a week in which a statutory holiday occurs is as follows: If an employee works on a statutory holiday and receives premium pay for those hours, the hours worked are ex- cluded from the overtime calculation; however, the hours paid for the statutory holiday are included. Employers are advised to contact the department if they have questions. 4 In Ontario, if an employee works on a statutory holiday and receives premium pay for those hours, the hours worked on the holiday are excluded from the overtime calcula- tion. If an employee works on a statutory holiday and receives regular pay for those hours, along with a substitute day off work, the hours worked on the holiday are included for the calculation of overtime. 5 The P.E.I. Employment Standards Act does not specifically address this issue. However, we have received information from the employment standards department that its policy is to exclude statutory holidays (worked or not worked) when calculating overtime for the week in which a holiday occurs. For more information, please contact the department.

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