Policy for Paid Time Off – Did You Miss Anything?

Generally, most employers formulate their organizational vacation policy without sufficiently pondering all the loopholes, options to curb them and how to attain optimal staff remuneration. This not only ends up as a disastrous policy failure but also is a sheer disappointment for all the stakeholders.

Putting tracking for paid time-off policies on the back burner is a sure recipe for unnecessary anxiety and headaches for the employer and staff. We have tried to compile as many scenarios as possible for paid time-off tracking and have broken them down for easy adoption by you and your staff. Our suggestions are based on real case studies that we have accumulated for years in the Canadian small business landscape.

What Is the Eligibility for a Staff Member to Take Paid Time Off?

An employee in Canada is eligible for paid time off after 12 months of consecutive employment. This is in contrast to the practices and policies in the US. In the US, things are a bit more complicated, as the rules and pre-requisites for paid time off, both from the employee and employer standpoint, are not defined. The same is subject to case-by-case definitions at the time the contract is signed.

There are provisions for a Canadian employee to take paid vacations prior to the 12-month time frame, but it should be made very clear at the outset that they are borrowing it against the future. Furthermore, if such an employee is terminated or leaves the job before the 12-month mark and has already used his or her paid time off, he or she must reimburse the employer.

Alternatively, a few employees would love to skip their vacation time but would still like to collect their time-off pay. This arrangement varies by province, and not every organization offers it. For instance, in the regions of British Columbia, Quebec, Newfoundland, Prince Edward Island and Alberta, this practice is restricted. For any other region, it would require the consent of the employer and the director/officer of labour standards.

Vacation Time/Paid Time Off – Eligibility and Conditions

It really is a matter of the province in which you live that would decide the minimum vacation time you are eligible for after having completed the initial 12-month employment mark with the same company. A mandatory minimum two-week vacation time is granted for all provinces except Saskatchewan and Quebec. For these two regions, the mandatory mark-up is three weeks for Saskatchewan and one day vacation time for every month worked for Quebecois.

But since these are figures are on paper and necessarily represent the allotted minimum, some companies make it a bit more attractive by offering extra vacation time as a hiring incentive. But everything beside the rule is to let the employee have at least two weeks vacation time and no less after twelve months of service.

When to Increase Vacation Time

This decision varies from province to province. For instance, after an employee serves for five years, employers in the regions of British Columbia, Alberta, Manitoba, Quebec, Northwest Territories and Nunavut should increase the vacation time to three weeks. In Prince Edward Island, Nova Scotia and New Brunswick, the employer should increase the vacation time to three weeks after the employee has served for eight years. In provinces like Saskatchewan, to get an increase in the vacation time to four weeks the employee is expected to have served for 10 years. For provinces like the Newfoundland and Labrador, an employee should have a continuous employment of 15 years with a company to have three weeks vacation time.

Paid Time Off: How Is It Calculated?

As a rule, vacation pay or paid time off is based on the percentage of an employee’s gross earnings in the previous year. This also means that whether you are calculating and tracking full-time or hourly based employees the method used has to be the same. This actually makes the calculation and tracking of vacation time pretty straightforward and simple. For each and every paycheque, the company can calculate percentages and define the vacation pay.

The percentage is decided by the Office of Labour Standards. Presently, the same is 4% of gross pay for two weeks, 6% of gross pay for three weeks and 8% of gross pay for four weeks.

What if the Employee Leaves the Organization before the First Year?

When the employee leaves the organization before 12 months of employment, the amount calculated as a percentage for every pay cycle has to be paid out. The rules for the timeline of the payment are, again, provincial. In British Columbia, the time frame is 48 hours of termination of the employee, for Alberta the time frame is three days after the notice of termination and 10 days when no termination notice is issued.

For Saskatchewan and Yukon, the same time frame is 14 days, and for Ontario the time frame is seven days. In Prince Edward Island and New Brunswick, the time frame for paying out the vacation time percentage is on the regular pay cycle day. It is highly recommended you check with the rule detail that fits you based on your province.

Tracking Statutory Holidays

Full-time employees are clearly eligible for statutory holidays. The rules and actual rate of pay for statutory holidays are mentioned on the paystub of the employee, and this keeps things clear for the employee as well as the management. It should also be noted that the money earned during statutory holidays are subject to regular taxation and deductions.

Employee Summoned for Jury Duty – How to Track It

The employer is strictly prohibited from terminating such employees for their absence. The employee and employer can make an internal arrangement relating to compensation. If for the duration of jury duty the employer pays the employee with any kind of salary, it is subjected to normal taxes and deductions.

Do You Want to Know More?

Though this is a short description for such a possibly exhaustive subject, we still believe that it can give you a good jumpstart on all your subsequent and advanced research on the subject. You may also get in touch with us at info.ca@checkmark.com or call us toll-free at 970-225-0522. Our dedicated support team will be more than happy to assist you.