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Guide Interpretation

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Part I - Act respecting labour standards

CHAPTER IV - Labour standards

Annual leave with pay (section 66 to 77)

Sections
66
67
68
68.1
69
70
71
71.1
72
73
74
74.1
75
76
77

Section 74

Annual leave indemnity

The indemnity relating to annual leave of the employee contemplated in sections 67 and 68 is equal to 4% of the gross wages of the employee during the reference year. In the case of the employee contemplated in section 69, the indemnity is equal to 6% of the gross wages of the employee during the reference year.

Days of absence

Should an employee be absent owing to sickness, an organ or tissue donation for transplant or an accident  under the first paragraph of section 79.1, or on maternity or paternity leave during the reference year and should that absence result in the reduction of that employee's annual leave indemnity, the employee is then entitled to an indemnity equal, as the case may be, to twice or three times the weekly average of the wage earned during the period of work. An employee contemplated in section 67 whose annual leave is less than two weeks is entitled to that amount in proportion to the days of leave credited to his account.

Higher indemnity

The Government may, by regulation, determine a higher indemnity than that provided for in this section for an employee on maternity or paternity leave.

Maximum indemnity

Notwithstanding the second and third paragraphs, the annual leave indemnity shall not exceed the indemnity to which the employee would have been entitled if he had not been absent or on leave owing to a reason mentioned in the second paragraph.

Interpretation

The employee referred to in section 67, 68 or 69 ALS is entitled to an annual leave indemnity which is equal to 4% or 6% of the gross wages he earned during the reference year, depending on the length of his uninterrupted service with the employer.

Gross wages

The use of the expression "gross wages" implies that one must take into account the wages and the various indemnities (statutory holidays, annual leave, miscellaneous leaves, overtime, bonuses, commissions, reported and attributed tips) received during the preceding reference year (on this subject, see the interpretation of paragraph 9 of section 1 ALS).

Absence for sickness, ORGAN OR TISSUE DONATION FOR TRANSPLANT, ACCIDENT, MATERNITY OR PATERNITY LEAVE

Where the annual leave indemnity of an employee is reduced due to the fact that he was absent, during the reference year, owing to sickness, organ or tissue donation for transplant, accident, maternity or paternity leave, the indemnity is then calculated as follows:
Weekly average of the wage earned during the period of work, multiplied by two or three (depending on the number of weeks of annual leave to which the employee is entitled under sections 68 and 69 ALS).

Example During a reference year, an employee worked 26 weeks, earning an average weekly wage of $500; he was absent from work due to sickness for 26 weeks. The employee was entitled to two weeks of leave under section 68.The annual leave indemnity is then calculated as follows:

26 (weeks of work) x $500.00  (wage) = $13 000.00
$13 000.00 ÷ 26 = $500.00 (average weekly wage)
$500.00 x 2 (weeks – section 68 ALS) = $1 000.00

The annual leave indemnity is thus $1 000.00.

* See interpretation: Section 74, paragraph 4, ALS

 

Example An employee has been employed for eight years. During the reference period, she worked 24 weeks at a weekly wage of $600.She took 18 weeks of maternity leave and 10 weeks of parental leave. She is entitled to three weeks of annual leave. The indemnity will be calculated in the following manner:

$600 X 3 (number of weeks of leave) = $1 800
$1 800 X 42 (24 weeks worked + 18 weeks of maternity leave) ÷ 52 weeks in a year = $1 453.85

* See interpretation: Section 74, paragraph 4, ALS

Moreover, it is specified that, for an employee on maternity or paternity leave, the government is entitled, by regulation, to determine a compensatory indemnity higher than that provided for in the second paragraph of section 74 but not exceeding that to which the employee would have been entitled had he not been absent from work.

Other absences

It should be noted that this exception regarding the method for calculating the annual leave indemnity is valid only in cases where the employee is absent by reason of illness, an organ or tissue donation for transplant, an accident or on maternity or paternity leave. Consequently, an employee who is absent following a layoff, for instance, cannot benefit from said indemnity for this layoff period.
In this latter case, the indemnity must be calculated in proportion to the length of time at work.

Example An employee worked 44 weeks, earning a weekly wage of $500.00; he was absent for four weeks by reason of sickness; and he was laid off for four weeks. This employee is entitled to an annual leave of two weeks under section 68 ALS.
The indemnity must be calculated in the following manner:
44 (weeks of work) x $500.00  (wage) = $22 000.00
$22 000.00  ÷ 44 = $500.00  (average weekly wage)
$500.00  x 2 (weeks - section 68 ALS) = $1 000.00
$1 000.00 x 48 (weeks worked + weeks off sick)
÷ 52 (number of weeks in the year) = $923.08
Consequently, the annual leave indemnity is $923.08.

* Section 74, paragraph 4, ALS

It should be noted that the annual leave indemnity shall not exceed the indemnity to which the employee would have been entitled if he had not been absent or on leave owing to reason mentioned in the second paragraph.

1979, c. 45, s. 74; 1980, c. 5, s. 5; 1983, c. 22, s. 103; 1990, c. 73, s. 25, s. 71; 2002, c. 80, s. 23; O.C. 984-2005; 2007, c. 36, s. 3; 2010, c. 38, s. 5.

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