Vacation Pay

What is the Vacation Pay in Alberta?

Vacation pay is a legal responsibility for employers in Alberta and in fact all of Canada. Going by the Employment Act, employers must provide annual vacation pay to all eligible employees.

However, this pay is not the same in all provinces in Canada. This article will be reviewing Vacation pay in Alberta, eligibility requirements, and payment method.

Vacation Time and Vacation Pay

Employers in Alberta are bound by the Employment Standard Rules to give their employees vacation time and vacation pay. Employees in Alberta are entitled to;

  • Two weeks of paid vacation after a year of employment
  • Three weeks of paid leave after five years of working for the same employer

However, an employee who hasn’t worked for up to 12 months can get vacation time if stated in the employment contract or upon request. Vacation pay is simply money employers pay their employees for vacation time. It also varies depending on the length of service but not for all types of employees.

Vacation Pay Non-Eligibility in Alberta

In Alberta, employees in some industries and professions are not eligible for vacation time or vacation pay. These industries include;

  • Licensed salespersons of real estate and securities
  • Commission salespersons who solicit orders majorly outside the place of business of their employees, including route salespersons.
  • Film or video production extras
  • Licensed insurance salespersons on commission

Although construction workers in Alberta are not entitled to vacation time, they must receive vacation pay of at least 6% of their wages.

Vacation Pay Duration in Alberta

Employees are bound under the Employment Act to pay Vacation pay within these durations:

  • An average of once monthly
  • Every pay period
  • A day before an employee’s vacation – this is applicable if the employee has not been paid.
  • Not exceeding the next regular payday after an employee’s vacation starts

The employer must also provide an employee with a statement of earnings that includes vacation pay at the end of each pay period.

Calculating Vacation Pay in Alberta?

In Alberta, vacation pay is calculated as a percentage of an employee’s wages. And as of 2020, wages in Alberta do not include overtime, holiday pay, severance pay, unearned bonus, tips and gratuities, and expenses and allowance.

Employers must pay all Employees who are on a monthly payment wage schedule their regular pay rate for vacation time. You can calculate each vacation week’s pay by dividing your monthly salary by the mean number of weeks in a month (4.333).

For example:

Mr. Tom receives CA$5000 as his monthly salary; his vacation pay would be; CA$5000 ÷ 4.333 = CA$1153.94. So, Mr.Finnick will receive a vacation pay of CA$1153.94 annually.

Employees who are not paid monthly but are paid hourly, weekly, by the commission, or other incentive pay have their vacation pay is calculated as a percentage of their wages depending on the length of service.

Below is a showing of how to calculate vacation pay in Alberta:


Length of service

Vacation Time

Vacation Pay

1 to 4 years

Two weeks

4% of yearly wages

Five years or more

Three weeks

6% of yearly wages

For example:

Mrs. Albert has worked in an establishment for six years and is paid CA$500 weekly. Her employer will calculate her vacation pay as follows:

  • CA$500×52 weeks = CA$26,000 (annual wages)
  • 6% of CA$26,000 = CA$1560

Therefore, Mrs. Albert will receive a vacation pay of CA$1560 yearly.

Increasing/Decreasing Vacation Pay

It is permissible under the Employment Standards Rules to increase vacation pay if an employer agrees to it. If an employer wants to reduce an employee’s vacation pay, the employer must notify the employee before the pay period commences.

However, the rate must not be below the minimum rate legislated. In addition, the reduction can only apply to future vacation pay yet to be earned and not vacation pay that has been earned but is yet to be paid to the employee.

Vacation Pay Owed at Termination

If your employer terminates your employment before a year of employment, you are entitled to receive 4% of wages earned during employment. However, if the termination is after a year of work, you will receive the same vacation, depending on the length of vacation time.

Your employer will calculate your vacation pay from the date you last became entitled to vacation time until the termination date. The rule governing vacation during termination goes thus:

  • Employers must pay vacation pay within ten days after the end of a pay period – that is, ten days preceding employment termination.
  • Employers can make payment 31 days after the last day of employment

Note that your employer might choose any of the payment rules mentioned above as there is no rule mandating them to go with a particular method.

Conclusion

Vacation pay in Alberta is quite different from that of other provinces. Employers calculate vacation pay per percentage of their employee’s wages. Alternatively, you can use a payroll calculator to handle your employee’s salaries to avoid mistakes.

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