Requirement to pay out unused vacation

Employee refuses to use vacation entitlement
By Brian Kenny
|Canadian Employment Law Today|Last Updated: 06/27/2012

Question: If an employee has a vacation entitlement that is greater than the employment standards minimum but refuses to take all of it, is the employer obligated to pay vacation pay equal to that entitlement or is it only obligated to pay out an amount equal to the legislated minimum?

Answer: In Canada, there are basically only two sources of law: the relevant legislation, which is government-made law, and the common law, or judge-made law flowing from the cumulative effect of judgments over time. In the context of vacation entitlement, the relevant legislation would be the employment standards statute. The relevant common law principles are derived from the law of employment contracts as reflected in court decisions over time. Employment standards legislation in all Canadian jurisdictions sets out the minimum amount of vacation time and vacation pay that employees are entitled to receive. Employers may not lawfully provide less than the statutory minimum. However, employers and employees are free to enter into an employment contract that exceeds the statutory minimums, and the enhanced vacation entitlement is a matter of contract between the employer and the employee that can be enforced through the courts.

However, the particulars of any greater or more favourable vacation entitlement will depend on the terms of the contract or agreement between the employer and the employee. Where there is a written agreement, the express terms of the individual employment agreement will dictate that particular employee's vacation entitlement. Unfortunately, in some instances, the meaning of these terms it is not always clear.