‘Use it or lose it’ vacation policies

Enforcing a policy that prohibits carrying over of holidays
By Brian Kenny
|Canadian Employment Law Today|Last Updated: 10/17/2012

Question: Can a company enforce a "use it or lose it" policy when it comes to vacations, if every employee is made aware of the policy in the employee handbook that states vacations may not be carried over to the next year, and no pay in lieu of holidays will be granted without the prior approval of the president?

Answer: A policy such as this will be troublesome because an employee could potentially receive no compensation for holiday pay.

As a starting point, employment standards legislation generally prohibits an employer and employee from waiving any rights conferred by legislation. Labour standards legislation guarantees a minimum level of rights and benefits that cannot be contracted out of or avoided through the introduction of policy that can have the effect of preventing an employee from accessing her statutory rights. The right to holiday pay is provided by labour standards legislation and is included within the scope of “general wages.” An employer cannot decide, unilaterally through an approval process, to withhold “general wages” that an employee is otherwise legally entitled to.