Vacation Pay Agreements Mandatory as of June 21

As you probably know, updates to the ESA from March 2024 introduced a new obligation on employers which comes into effect on June 21, 2024.

The ESA has been updated to clarify vacation pay.  Specifically, a written agreement on vacation pay is mandatory if an employer pays vacation pay in any way that is not “pay in a lump sum before the employee takes vacation.”

So, if an employer pays vacation pay on each regular paycheque or via salary continuance throughout the employee’s vacation (or any other way that is not lump sum before taking vacation), the law states that the employee must agree in writing to that arrangement.

Now is a great time for employers in Ontario to review their employment agreements.  If there is no agreement as to how vacation pay is paid, employers may need to introduce separate agreements about vacation pay in order to be fully compliant with the ESA.

If there are any other changes that may need to be made to an employment agreement (like updating a termination clause, benefits, job duties), now is the time to do it.

Reach out to our team if you have questions or need a new employment agreement made for your team.