My company said that because of lower production, we have to take one vacation day a week for the next three months. If we’re out of vacation days, that day would be unpaid. They said they’re doing this to avoid laying people off. Is this legal? Can I apply for employment insurance for the decrease in work? My contract says I’m supposed to work 40 hours a week, Monday to Friday.
The first answer
Mary Rolf, labour and employment lawyer, Pink Larkin, Halifax
If you have vacation time to use, your employer can direct when you use that vacation time. For example, under the Nova Scotia Labour Standards Code, an employer is only required to provide an employee with one week notice of when they will take their vacation. Employers can also require that employees make changes to already-scheduled vacation, although from an HR perspective, it is prudent for an employer to be reasonable in taking this step. Requiring an employee to cancel a trip or a family event or other multi-day out-of-town travel will be more problematic than requiring someone to change which Fridays they intend to take off. Neither is necessarily a violation of minimum employment standards provided the employee still receives their minimum statutory vacation entitlement, but the HR risks in terms of effect on employee satisfaction and morale are notably different.
Requiring an employee to take unpaid time off is a different matter. An employee in this circumstance will likely not be eligible for employment insurance because qualifying for EI requires an interruption in earnings, not simply a reduction. That said, if your contract states that you will work 40 hours per week, Monday to Friday, and your employer unilaterally reduces your hours and compensation by 20 per cent, this potentially gives rise to a claim for constructive dismissal. Constructive dismissal is a form of wrongful dismissal that can occur when an employer does not expressly terminate the employment relationship, but instead acts in a manner that indicates it no longer intends to be bound by the existing employment contract. Proving constructive dismissal is a high legal threshold, but a 20-per-cent reduction in hours and compensation can support this kind of claim. An employee in this situation may wish to seek legal advice on how to challenge the employer’s actions in their specific circumstances.
The second answer
Waheeda Ekhlas Smith, barrister and solicitor, Smith Employment Law, Toronto
In Ontario, an employer can generally schedule vacation or demand non-unionized employees take their vacations at certain times, but it can only do so in compliance with the Employment Standards Act (ESA). However, in your case, your employer mandating that you take one vacation day per week is not allowed – they must schedule you in at least one-week blocks unless you are the one requesting shorter increments (for which the request must be done in writing).
Perhaps more importantly, the effect of the “forced vacation days” may be more relevant than the reasons. While the company may be well-intentioned, if you are out of vacation days and it results in you earning 20 per cent less each week for three months, unless there is something in your employment contract that explicitly allows for periodic work reduction, you could argue “constructive dismissal.” Constructive dismissal can occur if your employer makes a significant change to a fundamental term of your employment (such as work hours or pay) without your consent. Claiming constructive dismissal can be challenging because the burden of proof lies with the employee.
Unfortunately, in your situation, you cannot receive EI for reduced work hours or pay. This is because, under the ESA, reduced work hours only equal a temporary layoff (entitling you to EI) if you end up earning less than 50 per cent of your regular earnings in a regular workweek.
It would be worthwhile to have your employment contract and the situation reviewed by an employment lawyer.
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