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Arbitrator Issues Award Regarding BC Hydro Vacation Payout Policy
Updated On: Mar 83, 2024

On December 30, 2023, arbitrator Randy Noonan issued his award pertaining to the issue of BC Hydro's new policy of paying out employees' unused annual vacation.

This issue began at the onset of bargaining in 2022, when BC Hydro advised Local 258 of their intention to payout unused annual vacation. The collective agreement provides language for banking employees' fourth, fifth, and sixth week of annual vacation. Both the employer and the union agreed that the expectation is for employees to take their three weeks of annual vacation each and every year. The dispute between the parties was around what happens if an employee doesn't take their three weeks of annual vacation each year.

Local 258 argued that the sentence in the collective agreement that read "Annual vacations must be commenced by 31 December" established a requirement for the employee to take their first three weeks of annual vacation and a duty for the employer to manage its employees to ensure they took their annual vacation. Local 258 also raised an argument that Article 21 (L) (1) allows for payout of overtime banks while there is no such provision for annual vacation. BC Hydro argued the annual vacation provision in the collective agreement doesn't explicitly say that an employee can bank their first three weeks of AV. They argued it was on the employees to schedule their vacation, and it was a reasonable exercise of management rights to pay out all or a portion of an employees' first three weeks of unused annual vacation. 

Below is an excerpt from the award:

What then, if for some reason, an employee does not request, schedule, or take their AV by December 31? Neither party suggests that the unscheduled AV time would be lost in this circumstance. That being so, it seems to me that there are three obvious options:

  1. The Employer could unilaterally schedule AV time for every such employee to commence on December 31.
  2. The AV time could be banked to be used at a later time; or,
  3. The AV time could be paid out.

I find that the first option is offensive to the Collective Agreement and may not be administratively feasible:

  • It would give to the Employer a right and an obligation not set out in the Collective Agreement, that is, to unilaterally schedule vacation times.
  • It could create a situation in which the Employer would be forced to schedule too many employees to be away commencing December 31 during storm season, which, contrary to the Collective Agreement, would not be in accordance with the Employer’s staffing requirements.

The second option is also offensive to the Collective Agreement. Only AV time for the 4th, 5th, and 6th weeks of vacation entitlement is allowed to be banked. It is not generally permissible to bank any of the first three weeks of vacation time. Of course, there may be individual circumstances which would require a relaxation of this rule, for example, for accommodation reasons.

That leaves the third option, the payout. That is the Policy adopted by the Employer. In applying the tests set out in KVP to the Policy, I find that the Policy is not inconsistent with the Collective Agreement, is not unreasonable, has been clearly and unequivocally stated, and was brought to the attention of the affected employees well before the Employer determined to act on it. As it is a new policy, the passage of time will disclose whether it is consistently enforced.

For these reasons, I find that the Employer’s Policy does not breach the Collective Agreement and that the grievance must fail.

I am mindful of the Union’s argument that Article 21(L)(1) specifically allows for payout of unused overtime credits whereas there is no similar provision related to AV payout. While that is a strong argument, it is not enough to overcome the problems with the Union’s interpretation.

I will end this award by returning to where it started, that is, by discussing some of the things that the case is not about. It would be a very different case if the Employer unreasonably denied an individual employee’s AV request or if the Employer set up unreasonable scheduling requirements that made it difficult for employees to have their vacation time off scheduled. It is not a case in which the Employer is encouraging employees not to use their vacation time and accept pay in exchange. It is not even a case in which, as in CBC, the Employer is offering a buy out option of vacation credits. If any of those situations were before me, a very different outcome would likely ensue.

Business Manager Responds:

BC Hydro has advised that unused 2023 AV that can’t be banked and was not taken by December 31, 2023, will be paid out on your February 16th pay.

Annual vacation is not merely a monetary benefit; it is an opportunity for members to rejuvenate, spend quality time with loved ones, and return to work refreshed and energized. Negotiating and securing annual vacation was a strategic effort aimed at promoting the well-being of union members.

Members should be mindful of the potential consequences of not taking their annual vacation, as it could impact the union's ability to negotiate favorable terms for future benefits and policies. Choosing to cash out annual vacation days rather than utilizing them in time off creates a disadvantage at the bargaining table. The ability to demonstrate a collective commitment to taking time off strengthens the union's position during negotiations for increased benefits or modifications to the annual vacation policy.

"It is essential that our members understand the significance of taking their annual vacation as intended. Opting for a payout may seem tempting in the short term, but it hinders our collective bargaining power when negotiating for improved conditions," said Gatzke.

As negotiations loom on the horizon, the union leadership hopes that this reminder will encourage members to prioritize taking their annual vacation and strengthen the union's bargaining position.


  • Local 258 IBEW

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