Monday, 18 December 2017

Enhanced Vacation Entitlements After Five Years – What Counts as Five Years?

Amongst the changes ushered in by the Fair Workplaces, Better Jobs Act, 2017, S.O. 2017 C.22, formerly Bill 148, is the provision of three weeks of paid vacation after five years of employment.

But what counts in the computation of those five years? Are seasonal workers who work every season, but not continuously, going to add together their time? What about someone who left and then returned? How long is five years?

The New Right to Vacation Time and Vacation Pay

I did not think it was possible for Ontario’s vacation laws to become more complicated, but here we are.

As of January 1, 2018, section 33 of the Employment Standards Act, 2000 will read as follows:

33 (1) An employer shall give an employee a vacation of,

(a) at least two weeks after each vacation entitlement year that the employee completes, if the employee’s period of employment is less than five years; or

(b) at least three weeks after each vacation entitlement year that the employee completes, if the employee’s period of employment is five years or more.

(2) Both active employment and inactive employment shall be included for the purposes of subsection (1).

(3) If an employee does not take vacation in complete weeks, the employer shall base the number of days of vacation that the employee is entitled to,

(a) on the number of days in the employee’s regular work week; or

(b) if the employee does not have a regular work week, on the average number of days the employee worked per week during the most recently completed vacation entitlement year.

(4) Clause (1) (b) requires employers to provide employees with a period of employment of at least five years or more with at least three weeks of vacation after each vacation entitlement year that ends on or after December 31, 2017 but does not require them to provide additional vacation days in respect of vacation entitlement years that ended before that time.

As of January 1, 2018, section 35.2 of the ESA:Employment Standards Act, 2000 will read as follows:

35.2 An employer shall pay vacation pay to an employee who is entitled to vacation under section 33 or 34, equal to at least,

(a) 4 per cent of the wages, excluding vacation pay, that the employee earned during the period for which the vacation is given, if the employee’s period of employment is less than five years; or

(b) 6 per cent of the wages, excluding vacation pay, that the employee earned during the period for which the vacation is given, if the employee’s period of employment is five years or more.

There are other vacation provisions that make things even more complicated. Let’s try to keep things as simple as possible.

Period of Employment

In the excerpts of the law included above, I placed the words “period of employment” in bold text. I did this to draw emphasis to the fact that the criterion for enhanced leave is a period of employment of five years of more.

“Period of employment” is, in fact, a defined term in the ESA. Section 59 of the law provides as follows:

59 (1) Time spent by an employee on leave or other inactive employment is included in determining his or her period of employment.

(2) Despite subsection (1), if an employee’s employment was terminated as a result of a lay-off, no part of the lay-off period after the deemed termination date shall be included in determining his or her period of employment.

This provision, and its related provision in section 8 of Ontario Regulation 288/01 are primarily used in the computation of one’s period of time for the purpose of calculating one’s entitlement to statutory notice of termination.

However, section 59 of the ESA bears the heading, “Period of employment: included, excluded time.”

Does section 59 assist us in understanding how to calculate “period of time”? Not exactly, but by looking at subsection 65(2) of the ESA, everything begins to become clear.

Non-Continuous Employment

Subsection 65(2) of the ESA provides as follows:

(2) All time spent by the employee in the employer’s employ, whether or not continuous and whether or not active, shall be included in determining whether he or she is eligible for severance pay under subsection 64 (1) and in calculating his or her severance pay under subsection (1)

Aha! All is now revealed!

The Key Difference

For now I am just speculating, and others are free to correct me, but to my mind, the wording “period of employment” used in the context of vacation entitlements is intentional, and is intended to reflect the definition and approach of section 59 – not the wording “time spent by the employee in the employer’s employ”, as used in subsection 65(2).

As such, in order to qualify for the enhanced vacation period and pay, an employee must be continuously employed for a period of five years, with the only possible interruptions to employment being leaves of absence taken in accordance with the provisions of Part XIV of the act, e.g. pregnancy and parental leave.

Takeaways for Employees with Labour Pains

The key takeaway for employees is that just because a lot of websites may say that an employee is entitled to enhanced vacation entitlements after five years, does not necessarily mean that the law will be enforced that way. While the law is new and has not yet been considered by the Ontario Ministry of Labour, the law may not be quite as some perceive it.

Takeaways for Employers with Labour Pains

The takeaway for employers is that what matters is what the law says – and what the law says is that the employee must have a “period of employment” of more than five years before he or she qualifies for enhanced vacation. While employers must be mindful of these statutory changes, they would also be prudent to obtain legal advice before acting on what one reads on the internet. (Appreciating the irony of that statement to this post.)

If you are an employer and you want actual legal advice with respect to your specific situation, then contact the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP; we would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

Sean P. Bawden is a partner with Kelly Santini LLP, located in Ottawa, Ontario, Canada. He practices in the areas of employment law and civil litigation. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Photo Credit: (c) istock/Ekaterina79

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