Vacation and Compensatory Leave Cash-Out for 2022–26

Date: December 22, 2021

To: Heads of Human Resources Directors / Chiefs of Labour Relations and Compensation and Public Service Pay Centre

Following consultations with bargaining agents, the Treasury Board of Canada Secretariat will be lifting the moratorium on the automatic cash-out of vacation and compensatory leave on March 31, 2022.

The lifting of the moratorium applies to executives, unrepresented, excluded and represented employees in the core public administration, except for employees in the Correctional Services (CX) Group and the Ships’ Officers (SO) Group.

Beginning in April 2022, payments will be issued to gradually reduce employees’ excess vacation and compensatory leave that may have accumulated since 2016.

For vacation leave, the mandatory cash‑out will take place at a rate of 20% per year for all hours in excess of applicable carry-over limits, each year, from March 31, 2022, to March 31, 2026.

To mitigate further accrual of vacation leave in excess of the carry-over maximum between April 1, 2021, and March 31, 2026, employees with vacation leave balances above the annual carry-over limit will, in addition to the 20% cash-out described above, also receive a payment for 100% of the earned but unused portion of their vacation leave accumulated during each fiscal year, starting on March 31, 2022.

Employees with a remaining balance in excess of allowable limits on March 31, 2026, will receive a cash-out for the portion in excess, in its entirety, in accordance with the applicable collective agreement provisions.

Employees with a compensatory leave balance on March 31, 2022, will receive a cash-out of 20% per year from March 31, 2022, to March 31, 2026. Unused compensatory leave earned between April 1, 2021, to March 31, 2022, and during each subsequent fiscal year will also be paid according to the provisions of the applicable collective agreement or terms and conditions of employment.

Executives will follow the same process for the mandatory cash-out of excess leave as for represented employees. To simplify the process, the vacation leave credit carry-over limit for all executives will be seven weeks, regardless of years of service, and the maximum additional carry-over allowed in exceptional circumstances will be a maximum of four weeks, regardless of years of service, until March 31, 2026.

Employees continue to have the option to request a cash-out of their excess leave at any time, subject to relevant collective agreement conditions. Those transitioning to retirement will also have their leave bank paid out in full before their pay file is transferred to the pension pay system.

Managers are reminded to continue to ensure that, at a minimum, their employees use their vacation leave in the year it is earned and, subject to operational requirements, to schedule any excess leave ahead of the planned cash-outs.

All questions should be directed to your Departmental Corporate Labour Relations or Corporate Compensation Official, who, if required, will direct their questions to the Compensation and Collective Bargaining Management group at Interpretations@tbs-sct.gc.ca or, for executives, to the Executive and Leadership Development team at EMP‑PGCS@tbs-sct.gc.ca.

Original signed by

Stephen Diotte
Executive Director
Strategic Compensation Management
Employee Relations and Total Compensation
Office of the Chief Human Resources Officer