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When can you cancel employee vacations?

Adam Gorley, Editor, HRinfodesk, published by First Reference, July 2014

Have you ever thought about cancelling an employee's vacation because your business was just too busy? Have you ever actually gone and done it? If so, you're not alone. Our last poll asked, “Would you be justified in cancelling employees' vacation plans if there was too much work on?” and of 351 respondents, 109 resolute bosses (31 percent) said sure it would be justified. Another 209 softies (60 percent) said no way. The remaining 33 respondents (nine percent) are sitting on the fence, presumably hoping the situation never comes up.

However, employers can't just act as they like without consequences, right? In general, once an employer approves an employee's vacation, the employer should have a very good reason to revoke the decision later. It could mean trouble if the employee is upset about the change to her or his plans.

The law is not clear on whether too much work to do is a sufficient hardship to justify cancelling an employee's vacation. Most provinces don't mention it in their employment standards legislation, but employers should always be careful of breaking promises to employees. An omission from legislation doesn't necessarily mean an advantage for employers, and courts have heard and decided on cases involving cancelled vacations.

In Saskatchewan Employment Act:

"If an agreement has been made on when the annual vacation will be taken and an employer cancels or reschedules an employee's vacation, the employer must pay all non-refundable deposits, penalties, and other pre-paid expenses related to the vacation. The employee must provide receipts for these expenses (e.g., hotel room, airfare, and other expenses).”

In Newfoundland and Labrador Labour Standards Act:

"Where an employer cancels, or changes the dates of the employee's annual vacation after having given the notice to the employee required by subsection (4), the employer shall reimburse the employee for reasonable expenses incurred by the employee with respect to the cancelled or changed vacation that are not otherwise recoverable by the employee.”

In these two jurisdictions, it seems that by law an employer can cancel previously approved vacation time for little reason, as long as the employer pays the costs of the cancellation. However, case law may place limits on when an employer can cancel an employee's vacation.

In 2006, Ontario's Superior Court found that an employer wrongfully terminated an employee after she reasonably refused to postpone her approved vacation. A hurricane in Florida had damaged the employer's home and local operation and the employer wanted to stay in the US to manage the repairs. Unfortunately, the employee had already booked vacation and the employer had approved a trip to Barbados that was scheduled just after the hurricane. When the employer asked the employee to adjust her plans-even offering to compensate her for the cancellation costs-she said no. The Court accepted the employee's refusal:

"Entitlement to a vacation and other time off is a very important benefit for any employee… Although it might fairly be said that entitlement to take vacation in the allocated amount whenever one pleases is tempered by the fluctuating business needs of the employer, it nevertheless is a benefit which should not be interfered with lightly… Even in the case of a small business, contingent arrangements should be in place to deal with such absences, whether planned or unexpected, to ensure that vacations are not arbitrarily disrupted.”

The employer had failed to make sufficient plans to cover employee absences in the event of an emergency, and paid the price for doing so.

In 2007, the federal Treasury Board changed its vacations policy in order to ensure it maintained desired service levels in peak busy periods. In response to an employee complaint, the Public Services Labour Relations Board found that the department did not promise employees that they could expect their preferred vacation periods based on past practice. The board's policy was implemented in advance, reasonable to meet its goal and applied to all employees.

Neither of these cases explicitly answers the question of whether an employer can cancel an employee's approved vacation due to too much work, but they do confirm that employers can schedule vacations to ensure there are enough employees to perform the work, and offer some important tips for avoiding problems if you decide to try it.

Employers should implement a vacation cancellation policy that reminds employees of their legal position, if appropriate, and outlines the conditions under which the employer may cancel an employee's vacation. You might give employees four weeks of notice of their vacation to allow time to better understand how much work there will be and, if necessary, before two weeks, cancel the vacation. Before you implement the policy, ensure you notify all employees well in advance, and apply the policy consistently and fairly. The policy should be linked to a service level policy that describes the company's practices for maintaining desired service during busy periods and unexpected events like emergencies, disasters, sickness, employee turnover and surprise business upswings.