02 Dec Calculate Vacation Pay in Saskatchewan
Calculating vacation pay in Saskatchewan means everyone gets a well-earned break and fair pay for hard-earned days off. Although one might think it’s as easy as paying them their regular wage for a working day, for the reasons listed here that’s actually incorrect. That would actually cause the employee to get paid less than they deserve. Gotta keep the employees happy! And one of the best ways to do that is to pay them correctly, right?
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Give yourself a day off (of payroll processing) though, sign up for a 30 day Free Trial of Payroll Connected and let the software do all the work for you. Just tell it how many hours the employees worked, and you’re done! Vacation pay, Overtime, Stat Pay, and all payroll deductions, are calculated completely automatically for as little as $12 per month. However, if you still want to know how to do this manually, below is the info you need to know.
To Calculate Vacation Pay: Start With the Rates
The first step is to determine what rate the employee should be earning Vacation Pay at. Employees in Saskatchewan are entitled to either 3 weeks of vacation for their first 10 years of service at the same company or 4 weeks if they’ve been with you for longer. Instead of simply telling you the vacation rate however, Saskatchewan gives you a calculation based on the number of annual weeks the employee qualifies for. But we’re totally nicer than the government, so we’ll give you the rates here:
– 3 weeks vacation = 5.77% rate (defined as 3/52)
– 4 weeks vacation = 7.69% rate (defined as 4/52)
Figure how many ‘vacation days’ the employee earns each pay period by dividing the amount of Vacation Days they’re allowed in a year by the number of pay periods in the year. Considering that most employees get a couple days off for weekends, it makes sense to base this on a 5 day work week, so 3 weeks off times 5 work days a week = 15 work days off in a year. Then divide this number by the number of pay periods in the year.
Example: 15 Vac Days / 12 pay periods = 1.25 Vacation Days earned per month
Example: 15 Vac Days / 26 pay periods = 0.578 Vacation Days earned per month
Now here’s the tricky bit. The Vacation Rate will be applied to the employee’s Total Wages for the period.
Saskatchewan defines the Total Wages as:
“Total wages includes all salary, overtime, annual holiday (Vacation) pay, public holiday (Stat) pay, commission, earned bonuses and any other payment for labour or personal services.”
That’s right! Saskatchewan is a province where there is actually Vacation Pay on Vacation Pay!
To Accrue or Not Accrue?
It’s important to note that there are two kinds of employees regarding Vacation Pay. Those that accrue (save up) their Vacation Pay, and those that do not (they get it paid on every paycheck). In both cases, you can start with the same calculation. For the following, assume that the employee is paid semi-monthly (24 pay periods) a wage of $2,500.00 at 3 weeks vacation per year. To calculate their Vacation amounts, do the following:
Vacation Days: 3 weeks * 5 work days per week = 15 Vac Days per year. 15 / 24 Pay Periods = 0.625 Vac Days earned this (and every) period.
Vacation Pay: 3/52 = 5.77% Vacation Rate. 5.77% * $2.500.00 = $144.25 Vacation Pay for this period
Vacation Pay On Top Of Vacation Pay
Now, if this employee Accrues (saves up) their Vacation Pay, then the 0.625 Vac Days and $144.25 Vac Pay will be added onto their pool and used at a later date. When used, the Vacation Pay will be added to their Total Wages before the Vacation Rate is applied for that period. For example, if they used all of the above accrued Vacation Pay, they would get: $2,500.00 wage + $144.25 Vac Pay = $2,644.25 Total Wages. $2,644.25 * 5.77% = $152.57 Accrued Vacation Pay for this period.
You likewise have to make the same consideration for employees that DO NOT save up their Vacation Pay. This means you need to apply the Vac-Pay-On-Vac-Pay calculation right away. Even though the Vacation Days calculation remains the same, the Vacation Pay calculation looks like this:
$2,500.00 Wage * 5.77% Vac Rate = $144.25 Vac Pay. $144.25 * 5.77% Vac Rate (again) = $8.32 Vac-Pay-On-Vac-Pay. Now add the two Vacation Pay amounts together: $144.25 + $8.32 = $152.57 Vacation Pay Total for this period.
As you can see, failing to calculate this Vac-On-Vac pay would result in this employee being shorted $8.32 Vac-On-Vac * 24 pay periods = $199.68 missed vac pay over a year! This secondary calculation is essential, even if it is a pain.
Hopefully this has helped you to understand the intricacies of calculating Vacation Pay in Saskatchewan. Instead of making these annoying calculations payroll after payroll though, sign up for a completely Free Trial of Payroll Connected, and you could solve your payroll headache for as little as just $12 a month after that. You’d be supporting a proudly Saskatchewan company and getting in-province support when needed, from 7am to 7pm CST, 7 days a week.