In an informal survey done earlier this year, I found that an alarming number of human resource professionals were incorrectly calculating the vacation leave earned by their employees. In some cases, this stems from a misunderstanding of two key provisions in the Holidays with Pay Act, whilst in others, the mistake is passed along from one HR manager to his or her successor like an unwanted gift.

Many employers are labouring under a mistaken assumption that vacation leave is not earned during the first year of employment. To the contrary, an employee begins to accumulate leave once he has worked for 110 days. Vacation leave earned in any given year of employment is normally granted in the following year of employment, unless there is an agreement with the employer that allows for leave to be taken in the year it is earned. In other words, leave earned in year one may be taken in year two and leave earned in year two may be taken in year three, and so on. In businesses that don’t allow workers to carry over vacation leave from one year to the next, they ought properly to grant the worker both the first year’s entitlement and the second year’s as well in year two. If this is not done, the result will normally be that vacation leave will always be taken in arrears and consequently, when the employment contract is terminated, the worker will always be carrying a balance. It is very important for an employee to know whether he’s taking leave that was earned in the current year as opposed to the preceding year.

It’s also very important for business owners to know the accurate amount of vacation leave that their workers are entitled to at any given time. Not only does this help with proper strategic planning, but it also minimizes the risk of unexpected costs at a later date.

If an employment contract (whether in writing or not) is terminated before an employee has taken all of his vacation leave, the employer is obliged to pay the employee an amount equal to the salary that would have been paid in respect of that period. This is irrespective of who terminates the contract.

The minimum amount of vacation leave that an employer must grant is two weeks for each year worked by an employee with fewer than 10 years’ service and three weeks for each year worked by an employee with more than 10 years’ service. For purposes of calculating vacation leave, a worker is treated as having worked for a full year if he has worked for more than 220 days. These are minimums only and can be increased by agreement between the employer and employee. Although vacation leave is a statutory right, it should generally be exercised only with the approval of the employer. This approval should not be unreasonably withheld.

If an employer breaches the Holidays with Pay Act, he may be fined up to a maximum of $250,000 or up to three months in prison. Now might be an opportune time to dust off that vacation leave policy document along with the christmas decorations.

Gavin Goffe is a Partner at Myers, Fletcher & Gordon and a member of the Firm’s Litigation Department and Labour Law Practice Group. Gavin may be contacted at gavin.goffe@mfg.com.jm or through https://www.myersfletcher.com. This information is for general legal purposes and does not constitute legal advice.