Recouping used but unearned vacation time

Allowing employees to use vacation time before it's earned can lead to complications at dismissal
By Brian Johnston
|Canadian Employment Law Today|Last Updated: 08/22/2013

Question: What can an employer do if an employee quits or is fired and has used more vacation days than she has earned to that point in the year? Can the value of the excess days be recouped?

Answer: The answer turns on whether there is an agreement between the parties for recovery of vacation days taken but not yet earned. Absent such agreement, there is little an employer can do to recover used but unearned vacation days, in both unionized and non-unionized workplaces. If there is an agreement providing for recovery on termination, the employer will be able to deduct accordingly.

Most employment standards legislation in Canada prohibits deductions that are not lawful deductions (such as Canada Pension Plan and employment insurance) without the employee’s consent. Some jurisdictions, however, have distinguished “recovery of overpayment” from deductions. For example, both the Ontario Labour Relations Board and Nova Scotia Labour Board have a history of cases where they have distinguished “recovery of overpayment” from other sources of deductions.