Two relatively recent decisions address some of the consequences for employees of taking their annual leave during the reference year rather than the following year. The general rule, set out in Section 70 of An Act respecting labour standards,1 (the “Act”) is that annual leave must be taken within twelve months following the end of the reference year, or the following year where a collective agreement or decree allows it to be deferred. In exceptional cases, annual leave may be taken in whole or in part during the reference year if an employee submits a request to this effect and the employer grants it.

ANNUAL VACATION PAY OWING UPON CONTRACT TERMINATION

In the first case,2 the Commission des normes du travail was claiming, on behalf of a former employee, an amount of slightly over $425 as an indemnity pertaining to annual leave. The complainant had been laid off for economic reasons on November 25, 2005. Between May 1, 2005 and November 25, 2005, he had already taken, in advance, all the annual leave to which he was entitled for the reference year covering the period from January 1 to December 31, 2005. On May 6, 2006, when informed that his layoff would last longer than six months, he received a compensatory indemnity in lieu of a termination notice equal to eight weeks of salary, computed on the basis of his regular wages. The Commission des normes du travail was claiming an amount equal to 6% of such compensatory indemnity, pursuant to Section 76 of the Act which provides for the payment of an indemnity pertaining to annual leave upon rescission of a contract of employment.  

Section 76 provides, on the one hand, for the payment of an indemnity equal to 4% or 6%, as the case may be, of wages in respect of annual leave earned during the reference year ended at the time of rescission and attaching to the fraction of annual leave that the emplo - yee did not enjoy. This provision also prescribes the payment of an indemnity, equal to 4% or 6%, as the case may be, of wages earned during the reference year in question. In this case, however, not only had the employee entirely used up his annual leave accrued during the 2005 reference year, but he also had not worked during the “current year”.  

The Court of Québec was called upon to decide if the Commission des normes du travail was justified in claiming an indemnity equal to 6%, based not on “gross wages earned during the current reference year”, but rather on the compensatory indemnity paid to the employee in lieu of a termination notice.  

In keeping with relevant judgments on this issue, the Court reiterated that such compensatory indemnity did not represent wages payable in consideration for services provided to the company, but rather a penalty for failing to provide a termination notice. As for the leave, it is computed based on days worked prior to contract termination, such that the indemnity for annual leave depends on actual work performed. However, the complainant had not worked during the reference year in question, namely the year commencing on January 1, 2006. Hence, the Court dismissed the claim by the Commis - sion des normes du travail seeking an indemnity in respect of annual leave and computed on the basis of the indemnity in lieu of a termination notice. Leave to appeal this decision before the Court of Appeal has been granted.3  

EMPLOYEES COMPELLED TO TAKE THEIR ANNUAL LEAVE DURING THE REFERENCE YEAR

In another case, the Court of Québec held that the employer had breached Section 70 of the Act by compelling two employees to take their annual leave during the reference year. Even though the employer had already paid the indemnity for annual leave at the time such leave was taken, the Court ordered the employer to pay the employees wages pertaining to leave which should have been taken during the year following the end of the reference year. To reach this conclusion, the Court deemed the amounts paid for leave taken prematurely to be a gratuity from the employer.

This decision was however reversed by the Court of Appeal of Québec,4 in whose opinion there was no legal basis to consider, under these cir - cumstances, the payment of an indemnity for annual leave as a gratuity.

The Court of Appeal held that, unless the Commission des normes du travail adduced evidence to the effect that the breach of the Act caused the employee hardship and inconvenience, such breach could not result in an award of damages.