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Vacation Pay for Salaried Employees

Expert: Monica Beauregard

Shauna asked:

A salaried employee of an Ontario production company has decided to resign after 6.5 years. The employee still has 2 weeks of vacation outstanding but has never received vacation pay as part of his normal wages.

Okay, yes, after so many years of service we get additional weeks vacation. So after five years I got an additional week, bringing my vacation allowance to three weeks in total per twelve month period. Okay, now here is the rub. I am a Salary employee, but I also get paid overtime for my extra hours worked. My understanding of the labour law is that they should be paying my 4% of my total wages (salary + overtime). With our hourly employees, many of which I supervise, we pay based on total wages and the percentage increases with every extra weeks vacation that they earn through additional years of service.

Monica Beauregard answered:

#1 When does an employer have to pay vacation pay?
In this case, on the employee's last pay cheque.

#2 Is the employer required to pay any outstanding vacation pay?
Yes. (I am assuming the following: that vacation entitlement is based on calendar year, that the outstanding vacation mentioned is carryover from years prior to 2000, and it is in addition to what has been earned this year).

#3 Is it fair to request pro rated payment for unused vacation time?
For vacation accumulated/earned in the current year (2000) the employee is entitled to vacation pay based on total gross wages earned year to date. In this case, because the employee is entitled to 3 weeks vacation this is equivalent to 6% vacation pay. To calculate total vacation entitlement you need to calculate total gross wages in the current year up to the last day worked, multiply this by 6% and then subtract gross wages for any days taken as vacation in the current year. And as mentioned above (under #2), this should be paid in addition to the carryover from previous years that the employee has not received.

About the author

Monica Beauregard is the co-author of Hiring, Managing and Keeping the Best: The Complete Guide for Canadian Employers [ISBN: 0070864217] and she is Vice President of Bridgepoint Inc., a human resources consulting firm.

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