We often get questions along the following lines: “my employer has a policy that says if I do not use my vacation by the end of the year I cannot carry it forward and it will be forfeited, can they do that?”
The simple answer is that these types of “use it or lose it” policies are contrary to the Employment Standards Act BC.
The ESA has the following basic principles relating to vacation time and vacation pay:
- Employees cannot contract out of minimum standards in the ESA (s. 4);
- Employees are entitled to both vacation time and vacation pay, this is mandatory (s. 57 and 58) and cannot be contracted out of by reason of s. 4;
- Vacation pay is “wages” for the purpose of the ESA (definitions s. 1);
- If an employer refuses vacation pay because it was not used in a calendar year on a “use it or lose it” basis, that is a “deduction from wages” (s. 21);
- A “use it or lose it” vacation policy is void as an impermissible contracting out (s. 4) and impermissible deduction from wages (s. 21).
The ESA recognizes as a fundamental principle that people need time off from work in order to maintain their own personal health. That is why the vacation time is mandatory. Vacation pay is mandatory to ensure that people can afford to take that time off from work.
These are the links to the relevant sections of the Guide to the Employment Standards Act and Regulation:
If you have any questions about the vacation policies at your work, our lawyers are available to provide advice.
