Can you require employees to take vacation days when you have a holiday shutdown?
Last December we asked in our HRinfodesk poll if an employer can require employees to take vacation days when they have a holiday shutdown. Out of 193 respondents, 128 respondents (66%) said yes. 49 respondents (25%) said no and 16 (8%) did not know how to respond.
Summer months and Christmas/New-Year holidays are typically considered quiet times for some businesses. Plant shutdowns around these times are a regular occurrence in various industries and sectors to reduce production and costs, accomplish yearly scheduled maintenance tasks and respond to demand conditions.
Furthermore, employees may also be guaranteed a summer vacation where an employer agrees to shut down its operations for a period of time. Although this ensures all employees will have a vacation during the summer, it may restrict the timing of these vacations to the shutdown period. Although this may be relatively costly in terms of reduced production, employers may prefer such a solution to simplify the administration of their employees' vacation scheduling.
In some industries, it is much more efficient for an organization to have all or almost all of its employees take their vacations at the same time. Skilled assembly-line operations may not be able to operate at peak capacity if even a small portion of the workforce is absent on vacation. Often, it does not make economic sense to keep a business operating either at full capacity or operating at all at certain times of the year. In other cases, an employer wants to ensure that its statutory obligations to provide both vacation pay and vacation time off are kept current.
"Plant closure” is the colloquial term used to describe when an employer stipulates that all or substantial all must take their vacation at a prescribed time. Although plant closures are most prevalent in the manufacturing industry, there is nothing at law to prevent employers from mandating a “plant closure” in any organization.
What does the law say?
Employment and labour standards legislation in Canada does not require you to pay employees for time off. This is the same situation as a short-term layoff. Collective agreements and company policies may however, provide alternative benefits. Some employers have policies that allow for holidays in late December to avoid any loss of regular pay. This may also apply during the summer months.
Employment and labour standards legislation maintains the employer's right to determine when his or her employees may take that vacation. The employer must give the employee at least a certain notice period (i.e., Ontario, two weeks' vacation per annum). Many employees operate under a misapprehension that they have an absolute right to pick and choose their vacation times. Employers must, therefore, communicate their policies clearly to their employees to ensure that there are no misunderstandings.
A holiday shutdown can come about, by scheduling a vacation shutdown in combination with the required yearly vacation, or by having your employees work extra hours before the Christmas period to earn full pay during the entire shutdown period. Employees would typically work Saturdays in October and November to earn pay for a shutdown in late December.
This said, yes, employers have the right to schedule employee vacation with notice although most workplaces co-ordinate time off with their employees even if they are not technically required to do so. Employers can require employees to take annual vacation during a period of customary plant shutdown (whatever the reason) if the employer has clearly articulated this requirement in advance in their vacation and/or plant shutdown policy. The employer must schedule the shutdown for a particular workweek-for example, the week between Christmas and New Year's Day. However, if employees do not have a universal anniversary date for vacation purposes, this will be difficult to administer and/or apply.