Ask the ExpertWhat types of pay are included in calculating Vacation pay?
Kelly vanOuwerkerk asked 6 months ago

I am looking into what types of pay other than base pay need to be included when calculating vacation pay for AB, SK, and NL. For instance, we pay field employees a regular wage but when they work in the field they also get a day rate. Should the employee be earning vacation on this day rate? 
Also, when discretionary bonuses are given, do employees earn vacation on them?

1 Answers
Rory Lodge Staff answered 5 months ago

In general, vacation pay is calculated based on the employee’s total earnings during the vacation entitlement year, which includes all forms of compensation such as salary, hourly wages, commissions, bonuses, and certain taxable benefits. However, the specific rules and regulations for vacation pay can vary by province or territory in Canada.
For Alberta (AB), Saskatchewan (SK), and Newfoundland and Labrador (NL), the rules for vacation pay are as follows:
Vacation pay must be at least 4% of the employee’s total wages, excluding vacation pay, earned during the vacation entitlement year. The vacation entitlement year is the 12-month period beginning on the employee’s hire date, or on a common anniversary date agreed upon by the employer and employee. All forms of compensation, including salary, wages, commissions, bonuses, and taxable benefits, are included when calculating vacation pay.
Based on the above rules, it appears that employees in AB, SK, and NL would be entitled to vacation pay on any day rate earnings received while working in the field.
Additionally, if discretionary bonuses are considered part of an employee’s total earnings during the vacation entitlement year, then the employee would also earn vacation pay on these bonuses. It is always recommended to consult with a legal or accounting professional to ensure compliance with the specific rules and regulations in each province or territory, as well as any employment contracts or collective agreements that may apply.