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Vacation Policies: Use it or lose it. We can do that, right?

25 February 2020

Blog submitted by Elevated HR Solutions

Vacation Policy 101 - image 2

Like clockwork, I start receiving the annual question from employers on their vacation policies: “We have a use it or lose it policy. We can do that, right?”

An initial disclosure, I am not a lawyer; therefore, any advice I provide does not represent that of a lawyer.

But no. It’s not legal. It can be a motivational tactic you use, but if your employees choose to fight it – you will lose. Especially if your policies are not extremely structured and the vacation you have given them is contractual.

Employers have valid reasons for wanting their employees to take the time off. Studies show that a rested employee is a much more productive employee. That said, I once worked for an organization that allowed endless accrual because they thought it was the right thing to do. However, they didn’t think the liability was “that big of a deal.” Plus, being a start-up, people rarely had time to take time off.

One employee ended up resigning from their employment by providing two weeks’ notice – stating they needed to leave due to stress – and the company ended up paying the employee out for 27 months of vacation. At that time, it was a $215,000 pay out. Undoubtedly, they fought it – and they lost, miserably.  For a small organization, this hurt.


With that said, here are 4 items for your consideration:

1. Employers can schedule the time for employees with a small notice period – the only “right” employees have is that that they have earned it.

2. Employers do not have to pay employees out for vacation time in cash – unless an employee terminates their employment.

3. Encourage your employees to be proactive and schedule their vacation in advance – a fried employee does no good to anyone.

4. Consider building an Open or Unlimited Vacation Policy. The idea is employees must take the minimum as set by the province (2 weeks in the first 5 years and 3 weeks in subsequent years). Any additional time off is based on whether or not they can go from a project and team perspective. There are some minor things to be aware of, but the liability goes way down. It sounds like it could get out of control but with accountability and strong leadership, it’s the best thing I ever did in my company!


Blog post submitted by Chamber Member, Michelle Berg, CPHR from Elevated HR Solutions.

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