Lost Vacation Days are Often Worth Nothing to a Dismissed Employee
By Howard Levitt
Skipping some or all of their vacation time is common for Canadian workers, a TD Bank survey found. The study revealed that 57 per cent of Canadian employees fail to use all of their vacation days in any given year, yet ironically, 93 per cent of respondents consider vacation important to their happiness.
For many employees, work is all-consuming, and taking time off seems to be more trouble than it is worth. Yet you do yourself no favour by not using your vacation days and may even come to regret it.
Being fired often provides salutary perspective. Dismissed employees we represent commonly regret neglecting to take their allotted vacation time and usually wish to sue for vacation pay. After all, their loyalty and sacrifices have been abused.
Legally speaking, though, they are often out of luck. Not taking your vacation can beget very little, or nothing at all. Employees need to remember that vacation is an important part of their compensation package. Employers recognize the morale boost vacations can provide. It’s one of the few forms of compensation that can provide value to the employee exceeding the cost to the employer.
Some paid vacation is mandatory. In Ontario and other provinces, the Employment Standards Act (ESA) provides for two weeks’ of paid vacation time each year, with 4 per cent of employees’ annual pay being awarded to provide for the money that would be earned during those weeks. In some provinces, mandatory paid vacation is three or four weeks. ESA vacation accrued is paid out when an employee takes vacation time, or at the end of the year if no vacation is taken.
All mandatory vacation days must be taken within 10 months of the end of the year in which it is earned, after which those days are lost (but not the pay).
Beyond the statutory minimums, all vacation time is strictly contractual. “Contractual” or “non-ESA” vacation in Ontario, for example, includes any time given beyond two weeks.
However, some employees are not entitled to any minimum vacation under the ESA, including, in Ontario, agricultural workers, lawyers, and public accountants. which means all of their vacation rights depend on what was negotiated with their employers. The terms of contractual vacation can be limited in almost any way. Employers generally aim to make the time taken minimally disruptive and used only for vacation purposes. Employers also want to avoid being slapped with a bill for several years of unused vacation.
When it comes to successfully claiming damages for vacation not taken, results vary.
For “non-ESA” vacation, employers can head off claims with a carefully drafted contract. For instance, it could stipulate that unused vacation days are not to be paid out, or provide vacation on a “use it or lose it” basis so that, at the end of the year, unused vacation days vanish. Employees should not assume their vacation accrues year over year, as court decisions on this issue are scattered.
Under ESA, however, vacation pay (4 per cent of earnings) never expires, as long as the employee’s claim is timely — within two years of non-payment. Practically speaking, though, courts are likely to look much further back in calculating vacation owing. That’s because employees often believe their vacation has accrued over years, and their employers have never disabused then of that belief.
As with many terms of employment, employers can easily control this through contract or policy and eliminate the accrual of vacation time and pay beyond the minimal ESA requirements.
So stop wasting yours and your employer’s time staring out the window dreaming of white sandy beaches and book a vacation.