Vacation Pay Trap
Under the Employment Standards Act (British Columbia), vacation pay must be paid at the minimum rate of 4% or 6% (depending on the employee’s length of service). If the employee is entitled by contract to more than the minimum standard of vacation, the vacation pay is also increased at a rate of 2% per week.
Vacation pay must be calculated on total earnings, which includes all salary, commission, bonuses and other incentive earnings. Employers often breach the Act by paying base salary only during vacation.
Employers may also trip up when they purport to include vacation pay in a commission rate or incentive payment. Without clear separation between the two, the total amount paid will likely be considered wages and vacation pay will have to be added.
Another common problem is failing to account for an increase in the vacation pay that must accompany an increase in vacation entitlement that occurs part way through a vacation year.
Almost all employers in BC are in breach of the requirement to pay vacation pay at least seven days before the start of the vacation.
Some employers ensure they are meeting vacation pay obligations by adding it to each pay cheque, but that requires the written agreement of the employee, and the amount must be calculated and clearly identified on each statement of earnings.
commissions employment obligation Employment Standards total earnings vacation vacation pay vacation time wages