Even lawyers get it wrong sometimes.
A recent case heard by the Alberta Court of Queen’s Bench provides an excellent summary of the critical importance of processing vacation and holiday pay in compliance with the law. In this case, law firm Stringer Delecky LLP was found to be liable for $19,746.32, representing two years of unpaid holiday pay, and $33,280.14 for unpaid vacation pay, to a former employee. The ex-employee, David Kusick, was a lawyer who resigned from the firm and subsequently filed a complaint under Alberta’s employment standards legislation for unpaid vacation and holiday pay.
Click here to read a summary of the case.
As noted in the case, Kusick had an employment contract which provided for the ‘inclusive’ payment of vacation and holiday pay. The employer argued that vacation and holiday pay were interchangeable which is, according to the law, wrong. Further, the employer did not keep accurate records for calculating vacation pay and holiday pay separately.
More importantly, it seems that the employer relied upon the fact that the original employment contract would be upheld because both the employer and the employee agreed to it and signed it.
What this case reinforces for us is the concept that employers, in the creation of the employment contract, cannot abdicate their responsibility to the law. When the employment contract is found to be incorrect or unlawful the statutory provisions, such as the relevant employment standards legislation, will prevail. Employment standards legislation typically provides for the minimum requirement that an employer must include vacation and holiday allocations when it pays its employees. The legislation also provides strict and prescriptive processes for tracking and maintaining compensation-related records. These factors are not negotiable, nor do they fall into an ‘opt-out’ category for an employer. An employer can provide a better benefit to its employees, such as vacation time or pay that is more than the minimum legislated requirement, but less than the minimum is not an option. The expensive and very public lesson Stringer Delecky LLP learned from this case, is that an employer cannot ignore the requirements of the law.
Discussion Questions:
- How many paid vacation days and statutory holidays do you earn in your current workplace?
- Looking at a pay stub/pay record from your employer, how is the information on it formatted? Does the pay stub clearly identify vacation pay as a separate item? What other information is included on the pay stub for record keeping purposes?
- If you were the compensation manager for the law firm noted in the article, how would you have processed the vacation and holiday pay differently?
- How would you use clear language in an employment contract that identifies entitlements for earned vacation (time or pay), holiday pay, and other paid or unpaid leaves of absence?