Employer Holding Vacation Pay Until Next Year

This is a discussion on Employer Holding Vacation Pay Until Next Year within the Salary & Workers Compensation forum, part of the LABOR & EMPLOYMENT LAW category; * I live in Ontario, Canada My employer has informed our staff that we aren't permitted to draw from our ...

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Old Jan 13th, 2011, 04:40 AM   #1
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Confused Employer Holding Vacation Pay Until Next Year

* I live in Ontario, Canada

My employer has informed our staff that we aren't permitted to draw from our vacation pay this year. Instead, our vacation pay is being held until January 1, 2012. However, this hasn't been the case since the start of my employment there (5 years ago).

I find it strange and deceptive to deny us to draw from our vacation pay. For instance, I just drew from my vacation pay before Christmas.

I do not interpret our employee handbook to say this is possible. However, it does seem to state that we cannot receive vacation pay unless we take days off for vacation (two weeks). Essentially, this means that we will be forced to take two weeks off "unpaid" this year. We will have to wait until January 1, 2012 to receive our accumulated vacation pay from 2011. But, it would be wise to use this year's vacation pay to supplement the days we take off throughout 2012.

I can't see any way to justify this new system. Isn't the vacation pay mine to withdraw whenever I choose? I see nothing but frustration and confusion to come from this. What could the company benefit from this method?

With that said, I was assured that our entire accumulated vacation pay will be given to us if we were to ever quit or be terminated. Is this legal? And, if this is the wrong place to ask such a question, could you direct me to who might be able to answer?

Thank you all so much for your time.
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Old Jan 13th, 2011, 02:17 PM   #2
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Default Re: Employer Holding Vacation Pay Until Next Year

If they retroactively changed an agreement they made and the change is to your detriment, you can sue for all lost amounts.

And report them to the labour ministry as well.
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Old Jan 14th, 2011, 12:42 AM   #3
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Default Re: Employer Holding Vacation Pay Until Next Year

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Originally Posted by Unregistered View Post
If they retroactively changed an agreement they made and the change is to your detriment, you can sue for all lost amounts.

And report them to the labour ministry as well.
Technically, the change could be considered a detriment as I do rely on this pay to be given when I take my vacation. In the past, we have been able to take our vacation pay, on our following cheque) whenever we chose. So, I would sometimes take it for emergency car repair, weekend trips, and things like that as well.

However, in this situation, would my vacation pay be considered "lost"? Technically, it's just been "moved" or "held" until next year. My vacation pay adds up to about $1,000.xx/year. At this level, I assume the act of suing would cost much more than I had to gain.

The 'Ontario Ministry of Labour' says this on their site for ESA:
Vacation | Ontario Ministry of Labour

"Employees are entitled to two weeks of vacation time after each 12-month vacation entitlement year. Ordinarily, a vacation entitlement year is a recurring 12-month period beginning on the date of hire."

In my case, (as I recall - it's been about 5-6 years) we began to accumulate our vacation pay after our six month probationary period. We were free to draw from our vacation pay whenever we wanted.

However, even in a case where the boss began to accumulate our vacation pay during our probationary period (even if he wasn't supposed to), would we have to "make up" for that error, even after 5 years? (Some employees have been here 25 years, and their vacation pay is being held as well, even though (when they started) they did not accumulate vacation pay until a year after their hire date).

I interpret the word "recurring" to mean that once we have started getting paid our vacation pay one way, it cannot be stopped. My employer might be able to change their practice with new employees, but he must let things continue on the same path for current employees. I don't understand how he can change the procedure, especially if we haven't signed any agreement to do so.

"Where the employer has established an alternative vacation entitlement year that begins on a date other than the date of hire, the employee is also entitled to a pro-rated amount of vacation time for the period (called a "stub period") that precedes the alternative vacation entitlement year."

Just to be clear, since our employer has established January 1st as our "anniversary" for our vacation entitlement year, does this not mean that not only can he not hold our vacation pay until the next year, but we are entitled to draw our entire vacation pay at the beginning of the year?

"If the vacation entitlement year is a standard vacation entitlement year, the employee will be entitled to a minimum of two weeks of vacation time after the 12 months following his or her date of hire and after each 12-month period thereafter."

In other words, if we have already been drawing from our vacation (in my case, I've just taken my vacation pay before Christmas to help pay for gifts, and have been doing so for the past five years), the employer cannot change the terms without our consent. (ie. "...each 12-month period thereafter.")

"An employee can give up some or all of his or her earned vacation time with the employer's written agreement and the approval of the Director of Employment Standards. This approval does not affect an employer's obligation to pay the employee vacation pay; employees may give up vacation time, but not the right to vacation pay."

To me, this just solidifies the fact that we are entitled to our vacation pay each year. However, under this new system, we are still "getting" vacation pay, but it is being held until the next year. Is this some sort of loop-hole?

"In most cases, the vacation pay earned during a completed vacation entitlement year or stub period must be paid to an employee in a lump sum sometime before he or she takes the vacation time earned. There are four exceptions:
  1. When the vacation time is being taken in periods of less than one week.
    • In this case, the employee must be paid vacation pay on or before the payday for the period in which the vacation falls.
    • For example, Alvaro is taking vacation from January 1 to January 3, and the normal payday that covers this period is January 30. Alvaro must be given his vacation pay on or before January 30.
  2. When the employee has agreed in writing that his or her vacation pay will be paid on each pay cheque as it accrues (accumulates).
    • In this case, the employee's wage statement must show clearly the amount of the vacation pay being paid. This amount must also be shown separately from any other amounts paid.
    • The employer can also issue a separate wage statement for the vacation pay being paid.
  3. If the employee agrees in writing, the employer can pay the vacation pay at any time agreed to by the employee.
  4. If the employer pays the employee his or her wages by direct deposit into an account at a financial institution.
    • In this case, the employee must be paid vacation pay on or before the payday for the period in which the vacation falls."
This "When to Pay" section says nothing about being able to hold our vacation pay, unless (as per #3) we agree, in writing.

Is my understanding right in the regard to vacation pay law?

Also, if my employer ends up presenting me with an agreement to sign, and forces me by saying "You need to sign this, or you will be terminated.", I've heard that I can sign my name and write 'under duress' beside my signature to show that I was forced into signing it, and that my signature counts for nothing. They cannot hold me to that contract if "under duress" is anywhere on the page.

Thanks again for all your time!
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