Vacation pay on vacation pay? Does that even sound right?
We didn't think so either. After some arduous searching and a few phone calls to Sask Labour,
We found this NEW legislature for Saskatchewan that for some reason they've been keeping secret!
If you pay employees vacation pay on each of their pay cheques, you now have to pay vacation pay on the vacation pay!
Calculating and Paying Annual Vacation Pay
Most employees are entitled to vacation pay, no matter what hours they work or how they are paid.
There are two options for paying out annual vacation:
Paying employees going on annual vacation; and
Paying employees not taking annual vacation within 11 months of the vacation time entitlement.
Salary for pay period = $1,200.00
Commission for pay period = $300.00
Total Wages = $1,500.00
Vacation pay on total wages = $1,500.00 x 3/52 = $86.54
Vacation pay on vacation pay = $86.54 x 3/52 = $5.00
Vacation pay on cheque = $91.54
In this example, vacation pay of $91.54 would be payable on the employee’s pay cheque. It is assumed that the employee will save vacation pay over the course of the year, and use the money when going on vacation leave.
In some circumstances, employers and employees will agree to have the vacation pay paid on each cheque – although not provided for under the Act, as long as there is a mutual agreement an employer can pay vacation pay this way.
Employers must have a signed document stating that they are paying out vacation pay on each cheque. Signed by both the employee and the employer.
It is important for the employer to maintain good records of the payment and ensure that it is separately identified on the employee’s pay stub. When paying vacation pay on each cheque, it must include all wages including overtime, commissions, etc. and the vacation pay earned during the pay period are used in the calculation.
To help calculate the amount of vacation pay owed to an employee, please see the online Vacation Pay Calculator
Want to know more? Click here for the link.