Since the summer months are the common time of the year for employees to take vacation time from work, employers and employees often having questions during this time of year regarding the legal rights and obligations of employers and employees in B.C. as it relates to vacation pay and the scheduling of vacation time.
Here is a list of the most important aspects of vacation pay under the B.C. Employment Standards Act (the “Act”) and under common law:
Vacation Time
Section 57 of the Act provides for the amount of vacation time an employee must be given each year. Employees become entitled to vacation time on the anniversary date of their employment. The amount of vacation entitlement is based on the number of continuous years of service. An employee who has worked at least 12 consecutive months for an employer becomes entitled to 2 weeks’ vacation time per year. After 5 years of consecutive employment, the employee becomes entitled to three weeks’ vacation time per year.
Vacation time is not reduced by periods of leave
Vacation time entitlement is based on consecutive employment and not on actual hours worked. Therefore, periods of approved leave of absence do not affect the continuity of employment of an employee for the purposes of calculating vacation pay.
Scheduling of Vacation Time
An employer must schedule an employee’s annual vacation in periods of 1 or more weeks unless the employee requests a shorter period. An employer has the right to schedule vacations according to business requirements as long as the employer ensures that an employee receives a vacation within 12 months after becoming entitled to it.
Vacation Pay
Unlike vacation time which can only be taken after 12 months of employment, vacation pay begins to accrue after 5 days of employment. The employer must pay vacation pay of at least 4% of all wages paid to the employee in the previous year.After the employee completes five years of employment, the employer must pay vacation pay of at least 6% of all wages earned in the previous year.
Calculation of Vacation Pay
The calculation of vacation pay is based on an employee’s entire gross earnings or wages from the previous year. This amount includes all wages paid, including vacation pay, bonuses, or commissions paid in the previous year.
When to Pay Vacation Pay
Vacation pay must be paid either at least 7 days before the employee’s annual vacation, or on the employee’s regular scheduled payday, if agreed to in writing by the employee. Terminated employees are entitled to receive all of their vacation pay owed within 48 hours of the date of termination.
Employee-Employers agreements
If an employer and an employee agree to that the employee is entitled to more vacation or vacation pay than the Act requires, the BC Employment Standards Branch can enforce this agreement if a complaint is filed.
Salary vs. hourly wage employee
Since vacation pay is calculated based on earnings, it does not matter if an employee is paid a salary or an hourly wage. In either case, a percentage of wages is calculated to vacation pay.
Unionized employees
the vacation pay and vacation time provisions found in Part 7 of the Act do not apply to employees who are subject to a collective agreement that contain provisions concerning vacation time and vacation pay.
For more information concerning vacation time and vacation pay, please refer to the following Interpretation Manual Guidelines: