Ask the ExpertCategory: QuestionsVacation – Use it or lose it policy Ontario
hri_Admin Staff asked 3 years ago

We have a use it or lose it vacation policy that only allows for 5 vacation days to carry over each year. The vacation carry-over must be used by no later that March 31 of the next year or it is forfeit, removed and will not be paid out. Are we legally allowed to do that in Ontario?

1 Answers
Glenn Demby Staff answered 3 years ago

Employees can lose their vacation time by failing to take vacation BUT employees cannot lose their vacation pay. This is often misunderstood. Many employers have a “use it or lose it” policy with respect to vacation. But this simply means that an employer can require an employee to take vacation time or lose the vacation time but this does not alleviate the employer’s obligation to pay that employee the vacation time.  For example, when a salary worker who is entitled to 2 weeks’ vacation time per year but fails to take the 2 weeks’ vacation time, and his/her employer does not force him/her to take the vacation time, the employer is required to pay the employee an extra 2 weeks’ pay.
Ontario’s Employment Standards Act, 2000 (“ESA“) provides a minimum  entitlement of 2 weeks’ vacation time to all workers to be paid at 4% of gross wages. Employers and employees can agree to more but not less. Some employed persons are exempted from the ESA such as some qualified or registered practitioners (for example, architects, lawyers, accountants, dentists, massage therapists, pharmacists, and others).

Mike Battista replied 3 years ago

What is the impact if the employer provides greater than ESA.