[rickt@bongarde.com]

in reply to: vacation tracking #94298

Hi,

A lot of payroll solutions offer vacation tracking as a part of their solution sets. I don’t know if you are using one, but that would be my recommended first step if you are. If you’re looking for a simple and easy to get into solution, Humi is what we use internally. Otherwise, a simple spreadsheet template is really all you need to do. 4% is usually 2 weeks, 6% is 3, and every 2% is roughly another week’s time allotment, so you want to make sure that whatever you are deducting is the equivalent. If you are moving to a pure PTO model and not deducting anything, you don’t have to worry because for payroll purposes you would treat the employees like they were on salaries instead of hourly. Again, I don’t know how you are currently organized.

However, there are some things to consider.

First, you need to give “reasonable notice” of this change and you will need to shore up the banked vacation pay with a payout, if necessary, so that everyone is on an even starting point. For example, if on Jan 1 (the day your transition), Tim has any surplus in his vacation pay bank, he would need to be paid out and start taking his two week’s as of that year. If, however, you have an employee start mid year, they would have a prorated allotment of days, unless it was negotiated otherwise in their contract.

Second, and tied to the first, you can implement a use it or lose it for time (encouraging everyone to take their holidays throughout the year), but you can’t have a use it or lose it for the money. So if you make this transition, and at the end of the year Tim uses only 1 week of his 2 week allotment, you can either pay him out for the unused vacation (if you have been taking weekly deductions or not) or allow him to rollover the time, which could mean Tim’s salary is a little higher in that year because he legally worked an extra week than contracted to. For this reason, a lot of companies opt for taking the vacation deduction so they can have a cash reserve, but choose to just manage the time aspect because they run lean or have high turnover – I don’t know the nature of your business, but that is something you should consider.

Last piece of advice, because you are required to give “reasonable notice” of this pending change, which is a very gray legal term, in the case of salary changes, I would always opt for as much as possible, with a minimum of 30-60 days. Overcommunicate. Use every channel possible. Email Tim, have a lunch and learn, grab Tim in the hall, post a notice on the wall, include a flyer with Tim’s paystub, put a post-it on Tim’s monitor, do everything including screaming from mountaintops. Salary adjustments, even something minor as moving from pay to time, are very affective on certain employees, who will likely feel like they somehow are losing money or vacation time. Be transparant about your reasons, illustrate how easy it is for them to manage, and express that you want employees to take vacations so they can recharge, refocus, and do their best work… just don’t take their vacations all at once.

I hope this helps, if not, please let me know what more I can do to help you in this transition.

HR Insider Staff

[rickt@bongarde.com]

in reply to: Notice of Termination – Alternative Employment #94187

In Canada, whether you are obligated to pay severance to an employee who declines a new position and is subsequently terminated depends on several factors:

Nature of the Offered Position: If the new position is substantially similar to the employee’s current role in terms of duties, responsibilities, compensation, and working conditions, and the employee declines it without reasonable justification, this might affect their entitlement to severance. However, if the new role represents a significant change—such as reduced pay, lower status, different location, or altered hours—the employee may have valid grounds to refuse it.

Constructive Dismissal: Offering a new position that significantly alters the terms of employment without the employee’s consent can be considered a constructive dismissal. In such cases, the employee may be entitled to severance pay as if they were terminated without cause, even if they declined the new position.

Employment Standards Legislation: Provincial employment standards laws or the federal Canada Labour Code (if the employment falls under federal jurisdiction) set minimum requirements for notice of termination or severance pay. Typically, if an employee is terminated without cause, they are entitled to either working notice or pay in lieu of notice, regardless of whether they declined a new position.

Common Law Obligations: Beyond statutory requirements, common law in Canada may obligate employers to provide “reasonable notice” of termination or equivalent compensation. Factors influencing this include the employee’s age, length of service, character of employment, and availability of similar work.

Duty to Mitigate: Employees are expected to mitigate their losses by seeking comparable employment after termination. However, they are not usually required to accept a substantially different or lesser position with the same employer to mitigate damages.

Good Faith and Fair Dealing: Employers have a duty to act in good faith during the termination process. Abruptly terminating an employee because they declined a new position could be seen as bad faith, potentially leading to additional damages.

Recommendation:

Given the complexities and potential legal ramifications, it’s advisable to consult with an employment lawyer familiar with Canadian law. They can provide guidance tailored to your specific situation, helping ensure that you comply with all legal obligations and minimize potential liabilities when terminating the employee.

[Author]

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