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Tracking leaves of absence

Tracking leaves of absence

By Yosie Saint-Cyr, LL.B., Managing Editor, HRinfodesk.com---Canadian Payroll and Employment Law News, September 2009

Many employers use one of three methods for tracking employee leaves of absence. The first method is to track all leaves separately as sick time, personal time or vacation time; the second method is to lump these programs together into one paid time-off bank; and the third method is to track all statutory (legally required) leaves separately from employer-provided leaves. The last HRinfodesk poll wanted to know: which method for tracking leaves do you use? The majority of respondents use the first method and track all leaves of absence separately (see table below for detailed poll results). Very few respondents use the other two methods, making us wonder, does it really make a difference how you track employee leaves of absence, as long as you do track them?

What are the legal requirements?

The law sets minimum standards for workplaces, which impose a set number of statutory leaves of absence and detailed record-keeping obligations on employers in every jurisdiction in Canada.

Employers must create detailed records pertaining to the employment of each employee, and retain those records over specified periods of time.

What records must be kept and for what period of time varies by jurisdiction. The main purpose of these records is to serve as evidence of compliance in the event of a complaint or audit under employment/labour standards legislation. Employers must make these records readily available for inspection by an employment standards/ministry of labour officer, even if a third party manages or retains them.

Employees governed by employment/labour standards legislation might have the right to take a specific number of unpaid periods off from work for pregnancy, parental, personal emergency, family medical, compassionate care, family responsibility, illness and injury and reservist leaves (hereafter referred to as statutory leaves of absence). They are also entitled to a minimum amount of vacation time and pay as well as a set number of public (statutory) holidays per year.

What entitlements, statutory leave, vacation time and public (statutory) holidays an employee has a right to take each year are found under the specific employment/labour standards legislation in each jurisdiction.

In general, an employer must retain all documents relating to leaves for three years after the leave expires (this time period may vary depending on the jurisdiction). These include written notices, medical certificates, documents indicating entitlements and that the leave has been taken, written election to opt out of benefit plan or not to pay the employee's contribution, any written agreements, and correspondences related to an employee's statutory leaves of absence that are received or produced by the employer.

An employer must record detailed information concerning an employee's vacation time and pay and keep this information for three years after the record is made (this time period may vary depending on the jurisdiction). In general, information with respect to vacation includes: vacation time earned since the date of hire but not taken before the start of the vacation entitlement year; vacation time earned during the vacation entitlement year; amount of vacation time taken during the vacation entitlement year; amount of vacation time earned since the start of employment but not taken as of the end of the vacation entitlement year; amount of vacation pay paid to the employee during the vacation entitlement year; and the wages on which the vacation pay paid was calculated and period of time to which those wages relate.

Certain jurisdictions require employers to record vacation information with respect to a stub period (where the employer has established an alternative vacation entitlement year: a recurring 12-month period chosen by the employer other than the first day of the employee's employment).

In addition, employers must also record public holidays paid, worked/not worked, notice of substitution of public holiday and proof that at least 70 percent of affected employees agreed to the substitution if not subject to collective agreement (may vary by jurisdiction) and the date of any substituted day off.

Furthermore, other legislation, either federal or provincial, may require that employers keep some of the same records for longer time periods.

Employers must first become familiar with all legally required leaves of absences and then determine which employer-provided leaves (such as paid time off or sick days) might be appropriate for their organization.

To view a comparative chart of record-keeping and retention requirements by jurisdiction, click here.

To view a comparative chart of statutory leave of absence requirements by jurisdiction, click here.

To view a comparative chart of vacation time requirements by jurisdiction, click here.

To view a comparative chart of public (statutory) holiday requirements by jurisdiction, click here.

How must these records be kept?

There are no specific formatting requirements in law. The employer can choose its own format for records. However, the law sets out what information must be captured, that it must be captured for each employee, and the time period during which it must be maintained and kept.

Leave of absence tracking usually follows strict company rules.

According to Watson Wyatt Worldwide, organizations with employees in multiple jurisdictions frequently want to adopt uniform benefits and compensation programs in all countries where they do business. However, in many cases there are both legislative and cultural barriers that make this difficult to achieve. Paid time-off (PTO) plans are a good example of a United States export that does not easily fit the Canadian mold. A typical Canadian benefits plan includes paid public (statutory) holidays, vacation, short-term disability (STD) and several other personal or floating days. A US PTO bank bundles separate paid time off programs into one comprehensive plan. The employee is allocated a specific number of days that can be taken for a variety of reasons. PTO banks typically include vacation and sick days, but may include other types of leave as well. In the US, PTO can also be operated in conjunction with a flexible benefits program where additional paid vacation can be bought or sold.

Many US employers view PTO plans as the most effective solution for a broad range of problems including lagging productivity and excessive absenteeism. In the 2001 CCH Unscheduled Absence Survey, PTO plans received the highest effectiveness ratings for controlling employee absence, above factors such as disciplinary action, bonuses and personal recognition. It has also been suggested that PTO allows employers to contain costs for time off, while at the same time empowering employees and giving them greater opportunities to achieve work/life balance.

Therefore, it is not surprising that some US parent companies are suggesting to Canadian subsidiaries that they consider adopting a PTO plan.

If PTO is adopted for Canadian employees, the PTO provisions must be carefully drafted to ensure employees receive their minimum paid-vacation entitlements—i.e., that public holidays, vacation days are protected. It is apparent that if employees need to take PTO due to illness early in the year, the number of PTO days available may not comply with the minimum statutory requirements for paid vacation. For example, a Saskatchewan employee entitled to15 days of paid vacation who has 18 days of PTO will erode vacation time if he takes more than three days of sick pay from the PTO bank.

To ensure compliance, the reasons why employees take PTO (vacation, sick days, other) must still be carefully tracked. This will introduce administrative complexity and could undermine one of the major perceived advantages of PTO banks: the ability of employees to draw on their account for any reason without having to justify their absence with medical evidence or other proof.

Effective communication is particularly critical if all PTO days are described as vacation. Employers will need to stress that sick days have been rolled into the vacation entitlement to allow healthier individuals to benefit from increased vacation while still allowing others to use the additional vacation days to cover the STD elimination period. Nevertheless, certain employees may still view the adoption of PTO at the expense of sick leave as a punitive cost-cutting exercise.

Accurate and complete records

As stated before, accurate and complete records can provide evidence of compliance with employment/labour standards legislation.

If the employer fails to keep complete and accurate records, the officer will have to determine compliance based on the best evidence available. For example, records kept by employees may provide the basis for evidence where the employer has failed to meet his or her record-keeping obligation.

Fines and administrative penalty may be levied for record-keeping violations and for the advance destructions of records that are required by law.