Canadian Payroll Reporter

4 Canadian HR Reporter, a Thomson Reuters business 2014 News July 2014 | CPR July 2014 | CPR problems." Failing to properly pay vacation pay could cause prob- lems for employee morale and, from a legal perspective, lead to complaints and fines from em- ployment standards boards. When an employee takes time off for vacation, each Canadian jurisdiction requires that em- ployers pay them vacation pay within a specified time period. The time period can vary de- pending on the jurisdiction. For example, in some provinces, in- cluding those in Atlantic Cana- da, payroll must be ready to pay the employee at least one day be- fore the vacation begins. In British Columbia, employ- ers must pay it at least seven days before the vacation. This is required "to ensure that an em- ployee has use of earned vacation pay on their holidays," according to the Interpretation Guidelines Manual for the province's Em- ployment Standards Act. Some jurisdictions, such as Saskatchewan, allow employers to pay vacation pay on the regu- lar payday that falls during an employee's vacation. However, if an employee requests that the employer pay it before the vaca- tion, the employer must do so. Ontario requires that employ- ers pay vacation pay in a lump sum before the start of the vaca- tion, although if employees are paid by direct deposit or the em- ployee's vacation is less than one week, employers may pay it on or before the payday that relates to the pay period in which the work- er took the vacation. Employers and employees may also agree in writing that vacation pay will be paid at a different time. Meeting the payment dead- lines should not be a problem if payroll knows in advance when employees are taking vacation, Lindsey says. Problems can arise when vacations come up at the last minute or when managers do not submit vacation paper- work on time. Annie Chong, manager of Carswell's Payroll Consulting group, says late notice of vaca- tions can be a problem in juris- dictions that require employers to pay vacation pay before the employee goes on vacation. "You may have to (cut a manual cheque) because the re- quirement is to provide the pay- ment prior to the commence- ment of their vacation." To stop this from becoming a regular practice, payroll depart- ments should make sure other managers understand the im- portance of deadlines, she says. "As a payroll lead, I would go back and advise the manager in the future 'This is what is causing us to scramble last minute to get a cheque to the employee,'" says Chong. "All of your internal play- ers have got to understand that we have deadlines that we have to meet in payroll and everyone has to co-operate and under- stand what those deadlines are." Some employers pay vaca- tion pay with each pay rather than waiting until employees take their vacation. Chong and Lindsey say this is fine as long as it is allowed in the jurisdiction in which the employee works, and the employer complies with any requirements to first obtain the employee's written agreement. In some jurisdictions, under certain circumstances, employ- ees may waive their right to take a vacation in a given year. Payroll must still ensure the employees receive their vacation pay and must generally pay vacation pay within the legislated timeframe for taking vacation after earning it (for example, within 10 months of entitlement). Check the legis- lation in the applicable jurisdic- tion for exact requirements. Termination pay Paying out vacation pay on ter- mination can also pose a chal- lenge for payroll. Each jurisdic- tion requires that final payments (including vacation pay) be paid to terminating employees with- in specific time periods. Some jurisdictions allow for more time than others. Changes to the Canada La- bour Code that took effect April 1, for example, give employers 30 days to pay vacation pay when there is a termination. Previous- ly, they had to pay it immediately. British Columbia only gives employers 48 hours to pay from VACATION on page 1 Terminations tricky see GET on page 8 legislation Deadline for paying vacation pay CanaDa Labour CoDe: Within 14 days before a vacation begins; however, employers may pay it on the employee's regular payday during or immediately after the vacation if it is not practical to pay it that way or if it is the established practice in the workplace. alberta: It may be paid at any time but it must be paid by the next regularly scheduled payday after an employee's next annual vacation begins. If an employer has not fully paid the vacation pay before an employee's vacation begins, the employee may request that the employer pay the amount owing at least one day before the vacation starts, and the employer must do so. Employers are also allowed to pay vacation pay with each pay. british Columbia: At least seven days before an employee begins vacation. Employers are allowed to pay vacation pay on an employee's scheduled paydays, if the employer and employee agree to this in writing or it is part of a collective agreement. Manitoba: Employers can decide when to pay vacation pay, but they must pay it by the employee's last work day before the vacation begins. Employers are allowed to pay vacation pay with each regular pay. new brunswick: At least one day before employees begin their vacation. newfoundland and Labrador: At least one day before an employee begins vacation. Employers may also pay vacation pay each pay period as long as they inform the employee and show the amount of vacation pay in their payroll. northwest Territories: At least one day before an employee begins vacation. nova Scotia: At least one day before employees begin their vacation. Employers may pay vacation pay with each pay, but employers that wish to do this must clearly inform employees and keep records that show they notified them. Employers must also identify vacation pay on an employee's pay slip and maintain payroll records that show that vacation pay has been paid. nunavut: At least one day before an employee begins taking vacation. ontario: In a lump sum before the vacation begins. The Employment Standards Act, 2000, provides some exceptions: If employers pay employees by direct deposit or if the employee's vacation is less than one week, employers may pay vacation pay on or before the payday that relates to the pay period in which the employee takes the vacation. Employers and employees may also agree in writing that the employer will pay vacation pay each period as it accrues. This is allowed as long as the employer clearly indicates the amount of vacation pay separately from other amounts on the employee's pay statement. Employers and employees may also agree in writing that the employer will pay vacation pay at any time to which the employee agrees. Prince edward Island: At least one day before the employee begins vacation. Quebec: In a lump sum before the employee begins the vacation. An exception applies for farm workers who are hired by the day. Employers may pay the vacation pay with each pay. If a collective agreement or decree allows for it, employers may pay vacation pay in another manner. Saskatchewan: On the employee's normal payday or, if the employee requests it, before the vacation begins. It may also be paid on each payday as long as the employee agrees. Yukon: At least one day before the vacation begins. noTe: See each individual jurisdiction for rules around terminations and vacation pay.

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