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At a few jobs I've had there's been a small amount on my pay stub called "Vacation Payout". What exactly is this? I tried reading the legislation but am confused. Is it basically saying each paycheck has to be increased by 4%? Can someone please add the background idea for why this exists?

When someone is terminated with severance, should this 4% be included in the calculation in anyway?

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  • Is this amount on every pay stub? Or only the final stub after separating? Oct 11, 2021 at 18:47
  • @JohnGordon each one
    – user39743
    Oct 11, 2021 at 22:46

1 Answer 1

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What exactly is this? ... Can someone please add the background idea for why this exists?

Basically, vacation pay is a sum of money that you get when you take your vacations, the intention is that you use that money to travel, do house renovations, or another activity during your downtime, hence it being paid at least 7 days before your vacation per 58. (2) (a).

Is it basically saying each paycheck has to be increased by 4%?

It does NOT automatically mean that your paycheck is increased by 4% unless agreed in writing between you and your employer individually (i.e. in your work contract) or collectively (i.e. collective labor agreement), as written on 58. (2) (b)

When someone is terminated with severance, should this 4% be included in the calculation in anyway?

Yes. If you are employed for more than 5 calendar days, you're entitled to 4% of total wages as vacation pay per Policy Interpretation Subsection 1, payable within 48 hours of termination if the employer terminates (i.e. you're fired or dismissed), or within 6 days of termination if the employee terminates (i.e. you quit) per Policy Interpretation Subsection 3.

Note that the law also differentiates days employed from days worked, and they make it very clear in the example for Subsection 1.

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  • So for example if I was entitled to one week of severance pay, it would be 1 week of pay plus the 4% vacation pay?
    – user39743
    Oct 11, 2021 at 14:06
  • @user39743 it would be 1 week of severance pay + all the vacation pay accrued over your employment period and not yet paid as of the termination date. Oct 11, 2021 at 14:13
  • I still don't get it. If you are entitled to severance pay for 1 week, you work 40 hours a week, at $20/hr - would severance pay be 40 x $20 or (40 x $20) x 1.04% ? I'm asking should the vacation pay be included in your severance pay, not must they pay any outstanding vacation pay amount?
    – user39743
    Oct 11, 2021 at 22:49
  • @user39743 If you look at how the severance pay is calculated, it should include everything, check the related legislation here. What I'm saying is that all vacation pay accrued and not yet paid must be included ON TOP of the severance pay as your "final wage" Oct 12, 2021 at 7:14

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