Does annual vacation pay payout in December affect stat holiday formula?
By Jane Southren | February 6, 2010
Does vacation payout annually in December affect the formula for a stat holiday pay when working part time (ie: Christmas, Boxing Day, and New Years Day) which fall within the previous four week period of time for calculation?
Jane Southren answered:
If the employer pays the employee vacation pay in December and the employee actually takes the equivalent vacation time during the four weeks before the work week in which the public holiday occurs, the amount of vacation pay paid out is included in the calculation.
If the employee receives vacation pay but does not actually take the equivalent vacation time during the four weeks before the work week in which the public holiday occurs, then the vacation payout is not included in the calculation.
Under the new ESA vacation time must be taken and it is the employers obligation to ensure that the employee takes the vacation time, even if that means scheduling the employees vacations for them.
Vacation pay can no longer just be paid out even if the employer and employee agree on it. If the vacation entitlement is to be paid out, and not taken, the employer or employee must obtain, in advance, the written approval of the director of HRSDC to pay out the vacation in lieu of taking it.
With that in mind the foregoing calculation for holiday pay makes sense.The inclusion of vacation pay in the calculation when the vacation has been taken really just makes sure that the calculation for statutory holiday pay reflects the employees proper hour allotment and does not penalize them for taking their vacation time, when the policy behind the statute requires them to do so.
On the other hand, if vacation pay is paid out and the equivalent vacation time not taken, excluding the vacation pay from the calculation avoids including additional earnings in the calculation which would have the effect of artificially increasing the statutory holiday pay amount to be paid.
For further information please see: www.labour.gov.on.ca/english/es/pubs/guide/publicholidays.php.