By J. Geoffrey Howard

Lisa, your best employee, tells you on November 18 that she just won two tickets to Mexico as a raffle prize but she has to use the donated tickets by the end of the year. This is the busiest part of the year for your business and, although your company has no written vacation policy, you have always told employees they can’t take their vacation from November 15 to January 1. She is very upset with you and tells you she can’t believe you would not make an exception for her as the top sales person. A few weeks later, you happen to overhear a co-worker saying Lisa has booked her trip to Mexico for December 23 with her fiancé. When you confront Lisa, she admits she has booked her trip anyway. As Lisa’s employer what can you do? If she takes the trip can you fire her? 

Lisa’s request raises the broader question of the scope of an employer’s power to determine when employees take vacation and what kinds of vacation policies are legally permissible. The Employment Standards Act (ESA) requires employers to provide two weeks of vacation every year, increasing to three weeks after five years of employment.

It also allows the employer to defer the taking of vacation for up to 12 months after the year in which it was earned, although most employers allow and something even require employees to take their vacation during the year in which it’s earned. But the ESA does not spell out who gets to choose when employees take their vacation time. Despite the importance of vacation to employees and the need for modern families to co-ordinate vacation times of two working parents along with school holidays and myriad other factors, such as availability of flights, the law has generally tended to recognize that it’s ultimately the employer’s prerogative to set vacation policies and to grant permission to take vacation.

Returning to Lisa’s vacation, a recent Saskatchewan case confirms the employer’s right to deny such vacation requests and to fire employees who take the vacation without authorization. In Gonzalo vs. Moores, Gonzalo worked for the clothing which had a long established vacation “blackout” period banning vacation from November through January, Moores’ prime selling season. Gonzalo was anxious to see her ailing mother-in-law in Chile over Christmas and repeatedly requested vacation time from her supervisor, who refused. When she announced she was going to Chile in any event, her supervisor warned her she would be terminated. Undeterred, she left on vacation over Christmas. On Gonzalo’s return, Moores advised her she was fired for abandoning her job and insubordination. Gonzalo sued, arguing a Moores’ supervisor had tacitly approved the trip or, at the very least, that her unauthorized absence did not warrant termination.

Unfortunately for Gonzalo, the court agreed with Moores, holding her willful decision to take vacation during a blackout period in the face of the warning amounted to gross insubordination that justified dismissal. By giving advance warning she would be fired, Moores further strengthened its position, making it impossible for Gonzalo to argue she had misunderstood the seriousness of the issue. The court’s decision also upheld the employer’s power to impose a vacation blackout period, finding it was reasonable, well-communicated and consistently enforced.

Returning to Lisa’s vacation request, her employer should give her a written warning that taking the unauthorized vacation will result in dismissal. If she leaves in the face of that warning, the Gonzalo decision suggests she can be fired. It would be prudent to publish notice of your vacation blackout period to all employees to avoid future disputes.

But there are limits on an employer’s power to control vacation. In the recent Ontario case of Watson vs. Summar Foods, an employee who had booked a vacation with her employer’s consent was found to have been wrongfully dismissed when she refused to change her dates the employer’s request and was terminated.

Watson and her family had been planning a two-week trip to her native Barbados to visit family and check on investments. Before booking, she had obtained Summar Foods’ approval of her vacation dates. Her boss, who was to cover for her, decided that, due to problems at another location, he could only cover for one week. He then demanded, without explanation, that Watson reduce her vacation to one week, offering to pay the cost only of changing her ticket. Watson refused, took her vacation and returned to find Summar Foods considered she had quit. In this case, the court held that, in the circumstances, Summar Foods’ request that Watson cut short her vacation was not reasonable. It was up to Summar Foods to make other arrangements. As a result, she was found to have been wrongfully dismissed and awarded 12 months of severance.

What these cases demonstrate is that, while employers generally enjoy a broad power to control the taking of vacation, that power must not be exercised arbitrarily. Moreover, given how important vacation is to most employees, employers and employees alike benefit from a clear vacation policy that avoids such misunderstandings.

Some elements of an effective vacation policy include:

• Definitions of any vacation blackouts or minimum staffing requirements that may prevent an employee from taking vacation during certain times of the year;
  
• Procedures for obtaining written approval of vacation. This is critical to accurately track vacation and avoid claims by employees that they have accumulated huge balances of untaken vacation over the years when they are terminated. The policy should state who must approve vacation (e.g. direct supervisor and department head) and who must be advised of vacation time being taken so it can be recorded (e.g. HR or payroll). Requiring written approval reduces the risk of too many employees being inadvertently allowed to take vacation at the same time, which can jeopardize minimum productivity and service levels;
  
• Clear rules on vacation “carry over” from year to year: employers who want to impose a “use it or lose it” policy need to communicate the policy and monitor to ensure employees are given the opportunity to take their vacation time. Under the ESA, employers are obligated to ensure employees take their statutory minimum amounts of vacation time. Only additional vacation time above the minimum can be forfeited. A further option is to pay out untaken vacation in excess of the statutory minimum.

When employees have clear guidelines on the use of vacation time, the risk of dispute drops dramatically, and scheduling vacation time becomes as relaxing as taking vacation.

Originally published in Business in Vancouver (April 1 – 7, 2008).

J. Geoffrey Howard is a partner with Gowling LafleurHenderson LLP in Vancouver. This article is not intended to be legal advice.