The introduction of Ontario’s Fair Workplaces, Better Jobs Act, 2017 (formerly Bill 148) has left many employers trying to understand and apply the legislatively required changes to their workplaces. One change causing considerable confusion is the revised vacation provision for long-tenured employees under the Employment Standards Act, 2000 (the ESA). Formerly, all employees were entitled to a minimum of two weeks’ vacation (with some caveats and conditions) and four percent vacation pay; effective January 1, 2018, the ESA requires that employees with five years or more service with a company receive three weeks of vacation and six percent vacation pay. Many employers are full of questions, though: When exactly can employees begin taking that extra week? When do they earn it? How does the third week change vacation pay?
The short answer is that, under the act, an employee accrues their third week of vacation during the entitlement year in which they will complete five years’ employment, and that, as usual, they may begin using that vacation during the next entitlement year. Therefore, if they accrue (earn) three weeks in 2018, then they can take those three weeks of vacation in 2019. However, this answer does not fully explain the special circumstances that can arise around stub periods, alternative entitlement years, and other arrangements employers might make regarding vacation with pay. There are also transitional provisions for collective agreements. With all these areas to consider, it may be difficult to understand how this provision may affect your organization.
Although calculating vacation with pay—especially for long-service employees—can seem complex, the system is in truth fairly straightforward. Accruing vacation time and pay can be a simple procedural task if you establish and communicate clear vacation entitlements and procedures.
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Employment Standards Act, 2000: Part XI: Vacation with Pay
Ontario Ministry of Labour, “Your guide to the Employment Standards Act: Vacation.“