Maternity/Parental Leave and Vacation Accrual

You have an employee going off on maternity and parental leave shortly and she has asked if she gets her full allotment of vacation paid out for the time period she is on leave.  In Ontario, vacation continues to accrue during any protected leave of absence such as maternity and parental leave; however, there is a difference between Vacation Time and Vacation Pay which I will explain below.  Whether that vacation is paid out or not depends on an employee’s employment contract.

Vacation Accrual

In Ontario, employees continue to accrue vacation time when they are on a protected leave of absence, just as they continue to accrue service credits and seniority during the leave.  A protected leave of absence is one in which the employee’s job is protected while they are away, and the employer is required by law to provide the same or similar job upon the employee’s return from the leave.

Vacation Time vs Vacation Pay

While your employee is away on maternity/parental leave, she is earning vacation time.  However, the vacation pay she earns will be determined by what is stated in her employment contract.  If her contract states that she will receive 4% vacation pay based on hours worked, then your employee will not have earned vacation pay during her maternity leave, only vacation time.  If, however, the contract says she will earn two weeks of paid vacation on an annual basis, then she will earn two weeks of paid vacation while away on a one year maternity/parental leave, regardless of the hours worked that year.  The employer will then owe her both vacation time and vacation pay in that instance.

Using the Earned Vacation Time

Ontario’s Employment Standards Act (ESA) states that If the deadline under the ESA for taking a vacation comes up when an employee is on pregnancy, parental, family medical, organ donor, personal emergency, declared emergency, or reservist leave, the vacation must be taken when the leave ends or at a later date with the agreement (in writing) of the employer and the employee.”   For most business operations, it is much simpler to have your employee use up her vacation time prior to returning to work, rather than have her take it at a later time, as you already have a person trained to do her job on the ground who has been doing it for the year or more while she has been away.

In the case of a salaried employee, this would mean coding her as being an active employee the day after her leave has ended, such that she is back on payroll, but she does not return to work until her accrued vacation balance has been used up.  For an employee who receives only the vacation time but has to have worked the hours in order to earn the 4% vacation pay, you would have her take her earned vacation time as unpaid leave until it has been used up.

Many provincial jurisdictions and the federal Canada Labour Code have similar employment standards when it comes to accrual of vacation under protected leaves of absence.  However, provinces such as Alberta do not allow for accrual during leaves of absence.  It’s important to check the pertinent employment standards for the province(s) in which your business operates.

Need help keeping track of vacations and a streamlined online method for requesting and approving employee vacation requests?  Give us a call to see how SymphonyHR can help your Human Capital Management and book your free demo today!