As employment counsel, we routinely work with employers to identify issues with their policies and practices as they relate to vacation (annual leave) and vacation pay under Quebec’s An act respecting labour standards (the “Act”). In this post, we identify four of the most common errors and misconceptions made by employers in order that they may review their policies and practices for compliance before taking off on their own well-deserved summer vacation.
1) Vacation must be taken in the year during which it is earned
Employers should not require employees to take their statutory vacation in the year during which it is earned. According to the applicable laws, employees progressively acquire vacation entitlement over a 12-month period (referred to in the Act as a “reference year”) for vacation to be taken the following year. Unless your policies or employment contracts provide otherwise, the Act states that the reference year runs from May 1 to April 30. Once vacation has accrued, employees generally have the following 12 months in which to take their vacation, subject to limited exceptions. Accordingly, the Act provides that vacation can only be taken during the year in which it is earned (i.e. “by anticipation”) if the employee makes a request to that effect and the employer approves the same.
2) Employees are paid 4% on each pay as vacation pay
Employees are entitled to receive their vacation pay as a lump sum indemnity before they take their vacation. It is only where employees take fractioned vacation time or vacation by anticipation that the employer can pay an indemnity with the regular payment of their wages which is proportional to the amount of vacation time being taken. Vacation pay must be paid when vacation is actually taken.
In addition, employers should be aware that, as outlined in the Act, vacation pay corresponds to a percentage of the wages earned by the employee during the previous year. Wages are interpreted to include salary, overtime pay, holiday pay, etc. As such, paying employees 4% of their current salary does not reflect the vacation indemnity amount to which employees are actually entitled. Moreover, employees who boast three or more years of consecutive service are entitled to an indemnity equivalent to 6% (not 4%) of the wages they earned during the previous year.
3) Employees are entitled to three weeks’ vacation only after five years of service
Following on recent amendments to the Act, employees are now only required to complete three years of continuous service at the end of a reference year to become entitled to a minimum of three weeks’ vacation. Previously, employees had to achieve five years of continuous service before becoming entitled to the same.
4) Part-time employees are not entitled to vacation or will have their vacation pro-rated based on hours worked
Part-time employees are entitled to accrue vacation at the same rate as regular full-time employees. The Act does not distinguish applicable labour standards on the basis of an employee’s full-time or part-time status, meaning that part-time employees are entitled to the same amount of vacation and to the same percentage of vacation pay as full-time employees. In fact, the Act prohibits employers from providing more vacation time or a greater percentage of vacation pay to full-time employees who perform the same work in the same establishment as their part-time counterparts simply because part-time employees work less hours in a week.