Vacation entitlement year
All jurisdictions in Canada include minimum standards with respect to vacations in their employment/labour standards legislation. In every case, the minimum length of annual vacations is two weeks after each year of continuous employment (12 months of employment), with the exception of Saskatchewan where the minimum is three weeks. Quebec allows employees with less than a year of service to accumulate one day of vacation per month worked in the reference year (up to two weeks). This 12-month period is called the “vacation entitlement year”.
For the purposes of annual vacation provisions, a “vacation entitlement year” may be defined in two different ways: it is either the continuous employment of an employee by one employer for a period of 12 consecutive months, beginning with the first day of employment, referred to as the “standard vacation entitlement year”; or a 12-month period beginning on a date chosen by the employer other than the first day of the employee's employment, the “alternative vacation entitlement year”, which may be defined as a calendar year or other year determined by the employer.
Our last HRinfodesk poll wanted to know how many employers used the standard or alternative vacation entitlement year by asking: On what do you base your vacation entitlement year? Our poll results indicate that the standard vacation entitlement year established under employment/labour standards legislation is still the norm; however, more and more companies are applying an alternative vacation entitlement year to decide an employee's vacation entitlement each year. Specifically, to decide an employee's vacation entitlement each year, out of 255 respondents, 96 (37.65%) stated that they use an employee's anniversary date; 107 (41.96%) use the calendar year, and 18 (7.06%) use their fiscal year-end as an alternative vacation entitlement year. Depending if their employees are paid on a salaried or hourly basis, 34 (13.33%) use a combination of standard or alternative vacation entitlement year.
Standard vacation entitlement year
Normally, an employee must have completed at least one year of service to qualify for an annual vacation.
The standard vacation entitlement year, starts the day an employee is hired and lasts 12 months. After this entitlement year-ends a new entitlement period begins. This happens every 12 months as long as the employee works for the employer.
Alternative vacation entitlement year
An alternative vacation entitlement is an entitlement year set by the employer that doesn't start on the date an employee is hired. This is also a recurring 12-month period, either a calendar year or a fiscal year-end.
A calendar year means: The amount of time between the beginning of the first day of January and the end of the last day of December in the Gregorian calendar365 days, or 366 in a leap year.
A fiscal year-end refers to the reporting year of a legal (business) entity. The completion of a one-year, or 12-month, accounting period, a fiscal year does not always begin in January and end in December. The beginning and end of the year differs depending on company needs or industry sectors.
For example, an employee might be hired on June 1, but the employer has set up the entitlement year to begin each year on September 1. If the employer uses an alternative vacation entitlement year, calculation of the vacation entitlement of the employee includes the calculation of the “stub period”.
The stub period is the period between the date of hire and the beginning of the first alternative vacation entitlement year, or the period between the end of the last standard vacation entitlement year and the start of the first alternative vacation entitlement year where the employer switches from a standard vacation entitlement year to an alternative vacation entitlement year. Employees earn a pro-rated amount of vacation time during a stub period.
If the employer chooses to define the year of employment using the calendar year or other year, it must communicate certain information to employees in writing at least 30 days prior to putting the year of employment into effect. The employer must notify employees of the dates of commencement and expiry of the year of employment and convey the method of calculating the length of vacation and the vacation pay for a period of employment that is less than 12 consecutive months.
The vacation entitlement year and stub period will generally include (depending on the jurisdiction) time the employee spends away from work because of:
- Temporary Layoff
- Sickness or injury
- Statutory leave of absences
- Any other approved leaves where there is no break in the employment relationship
Why convert to an alternative vacation entitlement year?
For simplicity purposes, an organization that does not want to track anniversary dates on an ongoing basis may want to convert to an alternative vacation entitlement year, either a calendar year or fiscal year-end.
An employee must not lose any entitlement to vacation time or pay as a result of the introduction of a common anniversary date (calendar year) or fiscal year-end.
When must vacation be given?
Vacations must be given to employees not later than four months (New Brunswick, PEI.), 10 months (federally regulated jurisdiction, Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, Yukon, Northwest Territories, Nunavut), or 12 months (Alberta, British Columbia, Quebec, Saskatchewan) after the date of entitlement.
If an employee has not worked for 12 months, the employer does not have to allow the employee to take any time off. The reason for this is that they do not earn any vacation time, only vacation pay. Vacation time is earned after one year of employment (except in Quebec).