ANNUAL VACATION PAY AND VACATION PAY DEFERRAL GUIDANCE
The following is intended to clarify the Annual Vacation Pay deposit and Vacation Pay Deferral process.
Note: The following information only applies to hourly seniority employees with at least one year of seniority. If you are a TPT you are paid the legal vacation pay percentage (4%) each week and, therefore, are not impacted. All Active Seniority employees with less than one year of service will receive a 4% vacation pay lump sum in week 26
What will happen during designated shut down weeks?
In an effort to offset the amount of tax withholding, while remaining compliant with CRA guidelines, and increase the total overall net pay, all hourly seniority employees will continue to be paid out a portion of any unused/unpaid vacation pay in week 26 (June 27th in 2019). Additionally, employees will now have 40 hours of earnings automatically applied to each of the designated shut down weeks (in 2019 this is weeks 28 and 29 pay). This means that eligible employees will now receive 40 hours pay in both of these weeks when they would normally not have received any monies. These allocated hours will be deducted from the lump sum payment in week 26.
If an employee is scheduled to work during the designated shut down weeks, then they will still be allocated 40 hours of vacation in addition to their regular weekly pay and any applicable overtime.
Vacation Pay Deferral
Process: Employees are provided with the opportunity to voluntarily defer a portion of their vacation payment to the week they are requesting vacation. If the employee chooses to defer additional vacation hours, they will now be paid during the week they are on vacation. Vacation pay deferred to a future week will reduce the amount of vacation paid in week 26 as a lump sum vacation payment. Example: If you planned to take a week of vacation August 5 to August 9, you have the ability to elect to have 40 hours of vacation pay paid to you in that week.
Note: The existing vacation pay advance process, which allows employees the opportunity to allocate vacation pay to weeks prior to summer shutdown, is still applicable.
Vacation Deferral Rules:
▪ Vacation deferrals can only be granted following the shutdown period through to the end of the current calendar year (July – Mid December)
▪ Vacation Deferral requests must be submitted on or before May 10th, 2019
▪ Employees only have the opportunity to defer vacation pay in 40-hour increments (Mon – Fri) in future weeks following the shutdown period if sufficient hours are available. In most situations, the total available vacation hours an employee can voluntarily elect to defer will be a total of 80 hours
▪ PAA hours cannot be deferred, and will always be paid in week 26 (end of June)
▪ Vacation Deferrals requests are IRREVOCABLE. Payment will continue to be made if a vacation request is subsequently cancelled, unless a G434 DR form is completed and approved by Management as indicated on the form
If I defer additional vacation pay, doesn’t this mean that my Annual Vacation Payment will be reduced?
Yes, if you elect to defer payment of your vacation pay to a future week, the lump sum payment made to you in week 26 (June) will be reduced by the deferred payment amount. However, you will then receive the vacation pay deferral payment in the week that you take the vacation. On an overall basis, this will generally reduce the amount of tax withholding and increase net pay.
Are there any situations where a Vacation Pay Deferral request will not be granted/approved?
Yes, there are various ways an application can be denied.
▪ Initial denial by the manager
▪ System denial when a form is submitted to payroll (request outside the permitted window, not enough vacation hours to defer, request not taken in a week block, PAA hours included)
▪ Application approved, however, employee/management invoke a cancellation
What will happen if my Vacation Pay Deferral request is not granted/approved?
If your initial request is not granted/approved for one of the reasons mentioned above, you will be notified by the Company and those hours will be automatically applied to your Annual Vacation Payment.
What happens if I submit a Vacation Pay Deferral Reversal?
Vacation Pay Deferral requests are IRREVOCABLE, however, if an extreme extenuating circumstance develops then a reversal request may be submitted using ‘G434 DR Vacation Deferral Reversal Request Form’. If a reversal request is approved, then you will receive payment for the vacation pay hours once the form has been received and processed by payroll.
What happens if I have a Vacation Pay Deferral Request in for a week that becomes a scheduled layoff?
You will be paid vacation pay and ineligible for SUB/EI.
▪ Take copies of all applications submitted
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