Do you need to use up the employee’s vacation and sick leave before they are laid off?

• Under normal circumstances, vacation banks must be drawn down or paid out before a termination.
• If your policies or employment agreements state that you will pay out sick days*, then you would typically have to pay those out upon termination.
• Employers in PEI do have the option to force vacation time use. Therefore, an employer can make an employee use their vacation time. However, employers may not be able to force vacation in anticipation of letting an employee go. (Vague, I know. Here you may want to engage legal advice.)

Employers should not consider this time when employees are laid off to be a break in service. That is, employees who worked 10 years before being laid off due to the pandemic situation, will still have 10 years of “unbroken” service upon their return to work in the future. This tenure may impact vacation entitlement, etc.

*In general, I try to dissuade employers from paying out unused sick days because (1) it could be considered discriminatory toward employees with illness or disability, and (2) it encourages employees to attend work while ill and possibly contagious.