Dentist employers should understand when Ontario law considers their employers as working toward vacation time or bonus entitlements. This article will assess whether a dentist’s employees who are on parental leave are counted as working toward their vacation time or bonuses under Ontario Employment Standards Act, 2000 (ESA) and the terms of their employment contract.
For a discussion on recent changes to vacation pay period requirements, see this article.
ESA minimum standards and employment agreements
Note that the ESA provides minimum standards that set a floor for the employee vacation entitlements that can be included in the employment contract. Employee vacation entitlements in an employment agreement that are less that the ESA minimum standards are void. However, an employment agreement can provide for vacation entitlements that are greater than the ESA minimums. If the employment agreement contains vacation entitlements are greater than the minimums, then the terms of that agreement are a binding contract on the employee and employer.
Employers and employees should have their lawyer review employment contracts to determine whether it provides greater entitlements than the ESA minimums. This article will assume that the employment contract only contains vacation entitlements that match the ESA minimums.
Does employee time on parental leave count as working days toward vacation time?
Parental leave is unpaid leave for work available to a new parent to care for a new child and includes mothers, fathers, adoptive parent, and those in a relationship with a new parent who intend to treat the child as their own.
Employees continue to earn time toward their length of employment, length of service, and seniority during period of leave such as parental leave. Under section 52(1) of Employment Standards Act (ESA), periods of an employees’ leave are included in calculating the (1) length of employment (whether or not it is active employment), (2) the length of the employee’s service (whether or not that service is active), and (3) the employees seniority, toward determining
There is no break in the employment relationship during a period of parental leave. Thus, time on parental leave counts toward the completion of a vacation entitlement year or a sub period, if applicable. For example, an employee on vacation for part of a vacation enlistment earn would still earn their vacation time at the end of that entitlement year as if they never went on leave.
It is important to flag the difference between how vacation pay and vacation time is earned under Ontario employment law. Although vacation time is accrued under the ESA while on parental leave, the matter of whether vacation pay is earned while on parental leave is subject to the terms of the employment agreement.
If an employment agreement states that “paid vacation” is earned through active service, then an employee on parental leave may not earn either vacation time or vacation pay while on leave. At the end of the vacation entitlement year (or stub period), the employer must ensure that the employee receives the greater of what was in fact earned under the contract and the minimum vacation time and vacation pay under the ESA.
Does employee time on parental leave count as working days toward bonuses?
An employment agreement may contain bonuses that an employee can earn after remaining employed for a certain period of time.
Section 52(1) of the ESA applies to any rights or entitlements under the employment agreement that accrue based on length of employment, length of service and seniority. This means that any bonuses in the employment contract that are earned by length of service, length of employment or seniority continues to accrue while the employee is on parental leave.
Is denying an earned bonus to an employee on parental leave discriminatory?
Denying an employee a rightfully earned bonus because an employee is on parental leave can be grounds for a human rights complaint. Under the Ontario Human Rights Code, every employee has the right to equal treatment with respect to employment, and to be free from discrimination because of family status or sex including pregnancy.
In Ifrah v. National Income Protection Plan Inc., the Human Rights Tribunal of Ontario (HRTO) found that an employer’s decision not to pay an employee on parental leave a retention bonus because she was on maternity leave for the last month of the retention period was discriminatory. That said, the HRTO made clear that this decision was based on the evidence that showed that the purpose of the bonus was fulfilled by the employee and not frustrated by the employee taking parental leave.
Takeaways
Dentists should note that, employees on parental leave accrue time toward earning their vacation time under the ESA minimum standards. However, whether time on parental leave accrues time for earning vacation pay depends on the terms of the employment agreement.
Moreover, time on parental leave may accrue time toward earning bonuses as provided for under the employment agreement. Denying an employee an earned bonus because they went on parental leave may also be grounds for a human rights complaint against the employer.
Dentists should consult their legal team to ensure that their employment contracts are clear on the terms of their employee’s vacation time, vacation pay, and bonuses.
Thank you to Ephraim Barrera for his contribution to this article. The contents of this article are not to be construed as legal advice. Contact Emerge Law’s lawyers for legal assistance.