Does my Employee Accrue Vacation While on Maternity Leave?

March 10, 2014, by HR à la carte | Work Environment and Policies

Frequently Asked Questions Series

Entering our fourth year of business, we’ve received a lot of questions from clients over the years and have noticed that there are several questions that recur over and over again.  We decided to create a Frequently Asked Questions Series of blogs and will tackle one question per blog.  This month’s question is

Does my Employee Accrue Vacation While on Maternity Leave?

This is perhaps the most frequently asked question we receive from clients.   We will tackle this question for the Ontario work environment, recognizing that 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.

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.  Maternity and parental leave is a protected leave in Ontario. 

Vacation Time vs Vacation Pay

There is a difference between vacation time and vacation pay in Ontario.  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 stipulates your employee 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.  Then you will owe both vacation time and pay in that instance.

Taking the Earned Vacation Time

The best way to use up the earned vacation time is to have your employee take it right after the leave has ended.  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.  The Ontario Employment Standards states:

“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 while she has been away.  This is the reason why many maternity leave replacement contracts in Ontario last for 14 months versus 12 months.  This time period gives a month on either end of the leave, one for training the new person coming in at the start, and a month to allow the person on leave to use up earned vacation time, come back to work and transition with the replacement prior to starting her old job again.

In summary, yes, your Ontario employee does earn vacation time while away on maternity leave.  However, you will have to look at the wording of her employment contract/offer letter to determine whether she also earns vacation pay.  Having a policy whereby your employees must use up earned vacation prior to returning from the leave is the simplest solution for most businesses.