When crafting a vacation entitlement policy that addresses employees returning from maternity/paternity leave and STD/LTD leave under Ontario’s employment standards, there are several considerations to ensure fairness, compliance with the law, and consistency in your benefits offering.

Ontario’s Employment Standards Act (ESA) does not specifically address how vacation time should be handled during maternity/paternity or disability leaves. However, it does state that employees on these types of leave should continue to accrue vacation time.
Both maternity/paternity leave and disability leave are job-protected under the ESA, and employees on these leaves are entitled to accrue vacation during their time off. Employees returning from disability leave should be treated similarly to those returning from maternity/paternity leave in terms of vacation entitlement. If your company policy provides vacation upfront for the calendar year and employees are unable to take their vacation due to being on leave, there are a few options to consider:

Option 1: Pro-rated Vacation Entitlement:
If an employee takes an extended leave, such as STD/LTD, for part of the year, you may choose to pro-rate their vacation entitlement based on the number of months they worked. However, this approach can be administratively complex and may lead to disputes, particularly if the employee’s leave extends into a new vacation year.

Option 2: No Pro-ration (Full Entitlement Given):
Under this option, employees would continue to receive their full entitlement (e.g., 4 weeks) for the year, even if they were absent for part of the time due to STD/LTD. This approach helps ensure that employees don’t lose out on vacation time due to illness and is viewed as a more generous practice. The downside is that employees might not have the opportunity to use their full entitlement, and there could be potential carryover issues if employees don’t use all their vacation days.

Accrual during leave:
While your policy doesn’t currently allow for vacation accrual (vacation is given upfront), Ontario’s ESA does require that employees continue to accrue vacation time during their leave (unless the employee is on a leave that exceeds 12 months). This means you may need to adjust your policy to reflect vacation accrual, particularly for employees who are out on STD/LTD leave.

If your policy offers upfront vacation time, and the employee has already used some of their 4 weeks (for instance, by taking vacation before the leave), you may want to clarify how much vacation the employee will receive once they return to work. Here are a few ways to address this:
Full entitlement, no proration: Continue giving the full 4 weeks of vacation as if the employee had not been on leave.
Prorated vacation: If you prefer a proration model, you would give the employee a fraction of the annual vacation time based on the portion of the year they were present for. For example, if they were on leave for 6 months, they could receive 50% of their total entitlement, or 2 weeks, for the year.
Carryover Policy: Your current carryover policy allows 5 paid vacation days to carry over to the next year, with any unused time beyond that being forfeited. This needs to be addressed carefully for employees who were on extended leave (STD/LTD, maternity/paternity). Since they may not have had the opportunity to use their vacation time, you should consider whether your carryover policy still applies to them or if it should be adjusted to allow for additional carryover or extensions for these employees.

One option could be to extend the carryover period for employees returning from leaves to allow them more time to use their vacation days.
Alternatively, you could consider making an exception to your forfeiture rule for employees returning from leaves, granting them the ability to carry over unused vacation for a longer period.

If an employee is on STD/LTD leave and has already used some of their vacation entitlement, consider allowing them to retain their full vacation entitlement for the year (without proration) to avoid penalizing them for being on leave. Clearly state that vacation time is accrued during STD/LTD, even if the employee is on leave for a prolonged period. For unused vacation days, extend the carryover period or adjust the forfeiture rule to accommodate employees returning from long-term leave.

Employees on maternity/paternity leave should also continue to accrue vacation during their leave, in line with ESA requirements. Provide full vacation entitlement for the year, regardless of leave, unless the employee was on leave for the entire year.

The best approach is likely to continue providing employees with their full vacation entitlement (without proration) during both STD/LTD and maternity/paternity leaves. You should update your policy to ensure clarity around accrual during leaves, vacation carryover, and the handling of unused vacation upon return. Let me know if you have any more questions!

-HRInsider Staff