Vacation for employees is a complicated topic in Ontario. If you are an employer reading this article, you certainly wouldn’t be the first to have a number of questions on how to administer a compliant vacation policy in the workplace. However, one of the most prevailing questions we receive on a regular basis is: “Do my part-time employees qualify for vacation pay?’’ Today’s post will answer this question, as well as shed some light on how vacation pay – and time – works in the province of Ontario.
In Ontario, vacation has two components: Vacation PAY and Vacation TIME – and they are treated separately under the Employment Standards Act. As such, the question can, and should, be modified to ask, ‘’Are my part-time employees eligible for vacation pay AND vacation time?’’
Let’s tackle the question on vacation TIME first before moving onto vacation PAY.
Vacation Time and Part-Time Employees
Every employee in Ontario, whether temporary, seasonal, contract, full-time or part-time, is entitled to vacation TIME each year. An employee’s entitlement to vacation time is not based on how many hours they work per week (ie. whether they are full time or part time). Rather, the amount of vacation time an employee is entitled to is based solely on their years of service with their employer. The minimum vacation time under the Employment Standards Act in Ontario is two weeks for 5 years or less, or three weeks if 5 years or more, regardless of whether the employee is full-time, part-time, temporary, seasonal or on contract.
In other words, part-time employees are entitled to 10 days (or 15 days depending on their years of service) of vacation TIME each year, the same as any other employee, including full-time ones, provided they have completed 12 months of employment. The difference, however, lies actually in the PAY, which I will explain a little later.
The only time an employee may take less than their 10 days minimum vacation time entitlement (or 15 if they are a 5 year or more employee) is in situations where the employee wants to take their vacation in periods of less than one week. The employee can only take vacation in periods of less than one week if the employee asks the employer in writing and the employer agrees in writing. In such cases, the number of vacation days the employee is entitled to is determined in one of the following two ways:
- the employer calculates the number of days in the employee’s usual work week and multiplies by two (or 3 if they are 5 years or more); or
- if the employee doesn’t have a usual work week, the employer calculates the average number of days the employee worked each week in the preceding 12 months, and multiplies this number by 2 (or 3 if they are 5 years or more).
Employee with a Regular Work Week: A part-time employee with less than 5 years of service, regularly worked Monday, Tuesday, Wednesday and Friday, or 4 days a week in the preceding 12 months. The employee is therefore entitled to 8 single vacation days in respect of that vacation entitlement year (4 days x 2).
Employee without a Regular Work Week: if a part-time employee does not have a regular work week, (perhaps one week they come in for 2 days and then 5 days the next), you must take the average number of days the employee has worked in each week for the most recently completed 12-month vacation year period, and then multiply that number by 2 (or by 3 if they are more than a 5-year employee).
- An employee worked a total of 160 days in the preceding 12-month vacation year
- There are 52.14 weeks in a year
- The average number of days would be 160 / 52.14 = 3.07 days
- The single vacation days the employee would be entitled to take would be 2 x 3.07 = 6.14 single vacation days (or 3 x 3.07 = 9.21 if they were a 5-year or more employee)
Vacation Pay and Part-Time Employees
As mentioned earlier in the blog, every employee in Ontario is also entitled to vacation PAY. Vacation pay starts accruing as soon as an employee begins working for an employer, even if only one hour is worked. Similar to vacation time, the amount of vacation pay an employee is entitled to is based on their years of service with their employer: an employee with less than 5 years of service is entitled to 4% of gross wages as vacation pay; an employee with 5 years of service or more is entitled to 6% of gross wages as vacation pay.
It should be noted that whether an employee works full-time or part-time will generally have an impact on the amount of vacation pay the employee receives since the pay is based on wages. Accordingly, the amount of vacation pay a part-time employee receives may not necessarily directly correspond with how much vacation time they actually take. For example, a part-time employee entitled to 10 days of vacation time but who only works 4 days a week, will essentially earn enough pay for only approximately 8 of the 10 days. Let’s demonstrate this by way of example.
- Let’s say our part time employee who works 4 days a week, earns a total of $30,000 a year in gross wages.
- Let’s next assume they have been with the employer for less than 5 years and therefore earn 4% vacation PAY on gross wages.
- They would be entitled to $1,200 gross wages in vacation pay ($30,000 x 0.04).
- As they have less than 5 years of service, this employee would be entitled to 10 days of vacation TIME.
- As a part-time employee, the amount of vacation PAY earned will not equal payment for the full 10 days of time:
- $30,000 / 208.56 days worked in the year (4 days week x 54.14) = $143.84 earned per day
- Then take $143.84 and divide this by $1200
- = approximately 8.34 days
- So, of the 10 days, roughly 8.34 would represent paid vacation days; the other (approx.) 2 days would not be paid
Vacation pay and time can be a tricky thing for employers to navigate, especially for part-time employees. At HR Performance & Results, we are always happy to assist you with any vacation-related issue you may need help with, along with other questions related to rules and regulations under the Employment Standards Act. Contact a member of our team today!