Because the COVID-19 pandemic has made travel impossible or risky to one’s health, employers may face employee requests to delay vacation time.  In this Insight, we help employers in Ontario understand their rights and obligations when faced with such a request.   

What is an Employee’s Vacation Entitlement?

Under the Employment Standards Act, 2000 (ESA)

Part XI of the ESA sets out the minimum requirements for an employee’s annual vacation:¹

• An employee whose period of employment is less than five years is entitled to two weeks of vacation time after the completion of each 12-month vacation entitlement year; and

• An employee whose period of employment is five years or more is entitled to three weeks of vacation time after the completion of each 12-month vacation entitlement year.² 

The “period of employment” is the period when the employee has been employed by the employer since the employee’s hire date.  Inactive periods of employment (e.g., leaves or temporary lay-offs) do not affect the period of employment; both active and inactive periods of employment are included when determining an employee’s vacation entitlement.³ 

The ESA defines a “standard vacation entitlement year” as a recurring 12-month period beginning on the date of hire.⁴ An employer may establish an “alternative vacation entitlement year,” which is defined as a recurring 12-month period chosen by the employer and beginning on a date other than the first day of the employee’s employment.⁵ An employee is entitled to a pro-rated amount of vacation time for the period of employment (the "stub period") that precedes the first alternative vacation entitlement year.⁶

If an employee will not be taking vacation in complete weeks, the employer must base the number of vacation days to which the employee is entitled:

• On the number of days in the employee’s regular work week; or

• If the employee does not have a regular work week, on the average number of days the employee worked per week during the most recently completed vacation entitlement year.⁷

An employee must request permission, in writing, from their employer to take vacation time in days rather than weeks; if the employer agrees to this in writing, the employee may do so.⁸

Under an Employment Contract

The employer and employee may agree in an employment contract that the employee will be entitled to a vacation period greater than the employee’s statutory entitlement.  If such an agreement is reached, the greater vacation period will prevail.⁹  Furthermore, vacation time can be taken prior to the expiry of the 12-month vacation entitlement year if the employer agrees, or the employee’s contract of employment clearly so provides.

Circumstances in Which an Employee May Forgo Vacation

If the Director of Employment Standards approves and an employee’s employer agrees, an employee may be allowed to forego taking vacation to which they are entitled under Part XI of the ESA.¹⁰ 

Determining the Timing of Vacation

The employer has the right and obligation to determine when an employee may take vacation for a vacation entitlement year, subject to the following rules:

• The vacation must be completed no later than 10 months after the end of the vacation entitlement year for which it is given.

• If the employee’s period of employment is less than five years, the vacation must be (a) a two-week period; or (b) two periods of one week each, unless the employee requests in writing that the vacation be taken in shorter periods and the employer agrees to that request.

• If the employee’s period of employment is five years or more, the vacation must be (a) a three-week period; (b) a two-week period and a one-week period; or (c) three periods of one week each, unless the employee requests in writing that the vacation be taken in shorter periods and the employer agrees to that request.¹¹

An employer may not schedule an employee’s vacation during the statutory notice of termination period, unless the employee, after having received the notice, agrees to the inclusion of the vacation time during the statutory notice period.¹²  

Timing of Vacation if Employer Establishes Alternative Vacation Entitlement Year

If an employer establishes an alternative vacation entitlement year for an employee, the employer has the right and the obligation to determine when an employee may take the vacation time earned for the stub period.¹³ However, the vacation must be completed no later than 10 months after the start of the first alternative vacation entitlement year. Unless the employee requests in writing that the vacation be taken in shorter periods and the employer agrees to that request, if the vacation entitlement is equal to two or more days, the vacation must be taken in a period of consecutive days.  However, if the vacation entitlement is equal to or more than five days, at least five vacation days must be taken in a period of consecutive days and the remaining vacation days may be taken in a separate period of consecutive days.¹⁴

Bottom Line for Employers

During the COVID-19 pandemic and otherwise, employers in Ontario have the right and obligation to determine when an employee may take vacation.  Employers are not required to allow an employee to delay their vacation, but may allow an employee to do so.  However, should an employer decide to allow an employee to delay their vacation, rules set out in the ESA apply. For a standard vacation entitlement year, the employer must ensure that the employee’s vacation is completed no later than 10 months after the end of the vacation entitlement year; for an alternative vacation entitlement year, the employer must ensure that the vacation is completed no later than 10 months after the start of the first alternative vacation entitlement year.  In addition, the employer must not schedule the employee’s vacation during the statutory notice of termination period unless the employee, after having received the notice, agrees to the inclusion of the vacation time during the statutory notice period.