Your new collective agreement should set out the rules for vacation entitlement. It does not need to be anything surprising, but the words should reflect the mandatory legislation. The scheduling process should be explained, always keeping control for the employer. Nothing worse than paying overtime to call employees into work to replace others off on earned vacation. Do not let soft scheduling practices slip in to your document.
Vacation has two considerations: amount of entitlement and pay. Vacation is an earned benefit accruing each work day over a 12 month period. One paid week off from a 40 hour a week schedule equals 2% of salary. The minimum standard in Ontario ( and across Canada) is two weeks for each completed year of service – 4% of pay. Pay includes overtime so an employee who is entitled to two weeks off on vacation without loss of pay, must also be paid 4% of any overtime, ideally at the moment of absence. However, some employers and all the construction industry pay as they go on the pay cheque. Alternately, some employers cash out every quarter or at 6 months. The approach can be bargained.
If an employer intends to pay an hourly rate to be inclusive of vacation, the wage statement and the written agreement with the employee must indicate that the rate includes 4% as vacation pay. To avoid having to pay on top of the hourly rate, the agreement should show the 4% as a separate amount marked as vacation pay.
The vacation year either runs for 12 months from the time the employee starts, thus creating a different year for every employee, or the year begins for everyone on a set date like January 1. If the year starts on January 1, then all employees starting after that date have vacation entitlement in the first year prorated so the pay and time represent the percentage of the year the employee worked. Someone who starts on April 1, earns 75% of the 2 week entitlement. Starting August 1, produces 7/12 or 58.3%. Similarly, the mandatory time off, if granted in the first year, depends on how much time has been worked.
Under the Ontario Employment Standards Act, an employer is not required to provide any vacation time off until after the employee has worked a full 12 month period. At that point, the employee has earned a full 4% of the annual salary ( plus 4% of any overtime). Once that earning milestone has been achieved, the employer has another 10 months during which it must schedule the time off. In other words, an employee may be assigned to take his vacation of 2 weeks, which he earned in the previous year, between January and October of the following year. Or the scheduling can be negotiated so long as this statutory standard is not violated.
Often, the employer can be quite flexible about when vacation time is taken. Usually, any time that is not a business peak period is available provided the employee gives the employer enough notice so appropriate staffing can be arranged. Complications arise when high numbers of employees want the same time off. The employer does not need to schedule everyone off when they want. The employer can control the numbers. To do this, a selection system should be arranged. For example, any person may request vacation in one week segments for any time period, but the persons with the longest service will have priority for any requests made before January 1. Any requests after January 1 will be first come first served. No more than two persons may be off in the same week. The same system can be made more fair for distribution by operating one week at a time through the entire selection group. This stops the most senior employees from picking their second week until every employee has chosen a first week. Another option is to allow the second week to be selected in reverse, starting with the most junior person moving to the most senior. Selection for the third week can revert to the most senior on down. Any approach is bargainable.
Generally, employers should be able to accept a variety of systems provided there are always enough employees scheduled to work the normal requirements of the Company. To protect against staffing emergencies, there must be a decision about whether or not an employer may cancel a scheduled vacation if work place demands arise. Bargaining about whether or not a vacation which has been scheduled becomes guaranteed time off is important. Employees making commitments for air fare, cruise payments, ski trips or cottage bookings need to know their travel investment will be secure.
Ensuring that employees actually take their vacation time off is important. Do not let employees work all year. Technically, they become entitled to 54 weeks of pay for 52 weeks of work. Do not permit roll over into the next year unless there are limitations. Also, limit the number of consecutive weeks an employee may take, especially in prime time. It is not fair to a group for the very senior employees to be able to take all their vacation in July and August if doing so precludes other employees from similar experiences. These types of fairness issues must be discussed and resolved, or the employer must maintain enough control to balance the competing interests of its group. Alternately, if the employer does not care who goes when, provided its work needs are covered, a Company could negotiate a scheduling system entirely based on seniority. That is why bargaining occurs. In fact, accommodating vacation scheduling may open the door for the employer to secure concessions on items which it views as more important.
The amount of entitlement, by law, increases in Ontario to 3 weeks and 6% of salary after 5 years. All the same issues discussed above still apply. The focus for the employer remains ensuring proper staffing when there is more paid time off without work. This is further complicated by the reality that nearly every employer gives a greater vacation benefit to its most senior employees. It is common for plans to provide 4 weeks after 10 years of completed service, 5 weeks after 20 and 6 weeks after 30 years. For each of these entitlements that exceed the statute, the percentage of salary does not need to include overtime. Therefore, the higher entitlements are often described in weeks of vacation time “without loss of regular salary”. However, for hourly rated employees who work overtime, an employer may choose to stick with the percentage of earnings formula: 4 weeks - 8%, 5 weeks -10%, 6 weeks – 12%.
Scheduling vacation in advance of earning the pay, can arise in any year. Employers may be prepared to allow employees to use their full allotment earlier in the year before it is earned. The prerequisite for permitting this convenience is securing an agreement from the employee in advance that if they leave employment before actually earning the pay, they authorize the employer to recoup the overpayment from other funds owing to the employee at leaving. Such a requirement can also be negotiated into the collective agreement.
Vacation accrual during an unpaid leave of absence is also an issue to be covered. For statutory leaves like pregnancy and parental leave, the service must continue to be counted. An employee of 4.5 years of service at the leave, who is away a year, returns to an entitlement increase to 3 weeks because she has crossed the 5 year service milestone during her leave. Thus, an employee who has been absent for 12 months may return and schedule a 3 week vacation. But, if her pay is based on percentage of earnings during the previous 12 months, there may be no pay. If, on the other hand, her collective agreement provides for three weeks off with pay, that is what she gets.
The same situation does not apply to unpaid leaves of absence not covered by the legislation. The parties can negotiate what happens to service accumulation for vacation purposes. Generally, service is maintained but not accumulated. It restarts with an adjusted service date, upon return to work.
Obviously, there are lots of issues to bargain. Deciding on the rules for vacation can be complicated. Do not accept a system some other employer has used without strong scrutiny. Do not accede to a union proposal unless you are satisfied it will operate to your benefit. Always remember that agreeing to an employee-friendly scheduling procedure should be worth concessions from the union on other matters. Do not deal away vacation for free!