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Vacation pay in ON:

Expert: Employment Standards Information Centre

Gerald asked:

Regarding when an employer can withhold accrued vacation pay in trust.

My employer uses the "Alternative vacation entitlement year" method of calculating vacation time.

I have been paid for the stub period, prior to last summer's vacation and am currently into my first year of employment within the alternative vacation entitlement year.

The company has established terms for the dispersal of the vacation pay such that during the first alternative vacation entitlement year the employee cannot access the accumulating fund. Is that legal?

The accounting method of arranging for vacation time is not an issue. Also, the value of the trust fund is not in question, rather, it is the dispersal of the vacation pay that is the issue.

Am I allowed to have a day off, paid for, with the now accumulating vacation pay? On what terms am I allowed to access the funds?

Here is a situation that recently occured to me.

We are in a slow period and the employer asked us all to take time off if we could. If we wished to, we could use the time off as vacation time if we were entitled.

Being a somewhat considerate employee I requested a day off to be considered as a vacation day, and was allowed a day off as such. Prior to being paid for this day I was informed that I had no vacation days available and would not be paid for the day off.

Having been previously paid for the stub period, I presumed that vacation days had been accumulating and that I could draw down both the time and the money on mutualy agreeable terms.

This is when I first heard mention the company's policy.

The crux of this matter is that the company is withholding my money from me without my permission.

Is that legal?

Employment Standards Information Centre answered:

To answer your question I contacted the Ontario Ministry of Labour, Employment Standards information centre.

First: this information is based on a workplace that does not involve a union. If there is a union in your workplace, you could have a collective agreement that takes precedence over the minimum requirements set out in the Employment Standards Act.

The Ministry representative noted that usually an employee is allowed to take off an individual day with mutual agreement between employer and employee.

However, the key here is mutual agreement. While many employers would agree to the single vacation day, they are not required to do so.

Your employer has the right to not allow the single vacation day (or any vacation time off) before the end of the 12 month alternative entitlement year, given that you have taken all the vacation accrued during the stub period.

Section 35 of the Employment Standards Act outlines the rights of the employer in this regard. The wording is very specific and clearly grants authority to the employer to determine when vacation is taken.

There is nothing in the Act that gives an employee the right to access vacation time and/or pay before the end of the current vacation year (as long as vacation is not owed from a previous year or stub period). What's more, an employer has the right to force employees to take an individual day off work, without pay. If this happens the employee does not have the right to insist that this day off be covered by a vacation day that would be open at the end of the current alternative vacation entitlement year.

It sounds, fortunately, like that is not happening at your workplace. If that were to occur and the forced days off were to become a regular, long term occurrence the employee would want to look at whether or not this is constructive dismissal, which is covered under section 56 of the Act.

This fact sheet on the Ministry website explains vacation time and pay rules in more detail: Guide to the Employment Standards Act: Vacation.

I hope this answers your question.

About the author

Julie King is the co-founder and managing editor of CanadaOne, Canada's first small business portal.

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