The Key Components to Setting Up Payroll: Part 5.7 – Vacation

6 mins read

This article is written to provide you with details on the Saskatchewan Employment Standards vacation legislation and how companies can modify this standard to meet the needs of their business requirements.

Canadian employers are required by law to pay their employees vacation per their Governing Bodies Employment Standards legislation. Since each provincial or territorial governing body’s minimum standards vary, please ensure you are informed of what their regulations are. In Saskatchewan:

Saskatchewan Vacation Regulations

    • Eligible full-time, part-time, permanent, term, temporary, or casual employees (including those who have not worked a full year with the same employer) receive vacation pay
    • Employees receive a minimum of 3 weeks of vacation between 0 to 9 years of service with the same employer and 4 weeks after 10 years
    • Employers must pay vacation on a regular basis (i.e. regular pay run)
    • Employers are required to pay vacation based on the employee’s regular earnings (i.e. direct cash compensation) multiplied by the 3/52 (5.77%) or 4/52 (7.69%) rule. This rule is determined on the credited annual vacation weeks divided by the total weeks annually, VP = E (X/52)

For example: An employee who is credited 3 weeks of vacation receives a paycheque of $965.65. Since VP = $965.65 (3/52) then their vacation pay would be $55.71.

Note: Businesses have the option to either payout vacation with each pay period or accrue vacation (bank) to be taken as a future paid day off.

    • Vacation must be paid out by December 31 annually, if vacation is accrued and not all taken
    • Vacation must be paid out to the employee within 14 days from termination

According to Saskatchewan Employment Standards, employers must allow employees to take vacation within 12 months after the date on which the employee becomes entitled to it.

Did You Know? Businesses can deviate from the standard, just as long as their adjustments meet or exceed the minimum legislation standard.

There are various ways that businesses can modify how vacation is administered at their company, some of the most common adjustments include:

    • Vacation eligibility date
    • How the years of service are determined
    • How many vacation weeks are credited
    • Offering paid vacation time in lieu of paying out vacation
    • Administering vacation based on days or hours
    • How vacation time is accrued (annually or monthly)
    • How vacation time taken is administered
    • Allowing vacation to be carried into the following year

As employers are eligible to exercise the option to modify their vacation policy from their Provincial Employment Standards, it is crucial that how they administer vacation does not result in a reduction of any employee rights and meets or exceeds the minimum standard set forth by the governing regulatory bodies.

Now that you understand how vacation pay is administered according to Saskatchewan Employment Standards legislation and know that companies can deviate from this standard and modify their policy to administer vacation as they choose, it is time to put it all together and develop your company’s Vacation Policy.

The main purpose of implementing a Vacation Policy is to ensure that a standard is in place for employee equity which also further clarifies vital rules and expectations to how vacation time is handled and administered at their company, keeping in mind that whatever modifications are made meet or exceed employment standards legislation.

In the downloadable package below, there are three templates for you to use. These are examples of what your company’s Vacation Policy may include:

    • Vacation Days Guideline – General: contains the minimum standards set by Saskatchewan’s Employment Standards with no modifications, meets the minimum expectations.
    • Vacation Days Guideline – Modified A: contains minimal modifications to the standards set by Saskatchewan’s Employment Standards, meets and exceeds the minimum expectations.
    • Vacation Days Guideline – Modified B: contains more comprehensive modifications to the standards set by Saskatchewan’s Employment Standards, greatly exceeds the minimum expectations.

Please stay tuned for the next part of this series, 5.8 when we discuss Sick Days.

Download Key Components to Setting Up Payroll: 5.7 – Guide & Templates (zip).

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Visit our Resource Library for all available downloads.

If you require assistance with any of the guides, forms or templates, please contact a BIG representative.

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