FAQs on cash-out of excess vacation and compensatory leave

Overview of the changes

For Treasury Board employees in the CP (formerly AV), IT (formerly CS), NR, RE, SH and SP groups, a new agreement provides for 20% of your excess vacation and compensatory leave to be cashed out for five years in a row on March 31 each year (from 2022 to 2026). The amount cashed out will be calculated based on the value of 20% of your excess leave hours on March 31 of each year. On March 31, 2026 (the last cash-out) all remaining excess hours in your leave banks will be cashed-out.

One of the goals of this agreement is to inspire PIPSC members to take the leave that they were unable to take during the pandemic, thus reducing the amount of banked excess leave. Another goal is to alleviate the tax impacts of your cash-out by gradually liquidating your bank by 20% each year rather than 100% of the excess leave all at once.

To begin, there are two important questions you need answered, and the answers are different depending on which bargaining unit (group) you belong to:

Sample vacation leave cash-out calculation

Applies to: CP (formerly AV), IT (formerly CS), NR, RE and SP groups

The following sample calculation depicts a vacation leave bank cash-out:

1. On March 31, 2021 – let’s say your vacation leave bank had a total of 362.5 hours. This means that on top of your allowable carryover of 262.5 vacation hours – you had 100 excess vacation leave hours in your bank.
2. Let’s also say you used 20 hours of this excess vacation leave throughout the 2021-22 fiscal year, leaving you with 80 excess hours on March 31, 2022.
3. And finally, let’s not forget that you also earned your regular allotment of 187.5 vacation hours during the fiscal year (2021-22) and, for the purposes of this example, used 100 hours, leaving an excess of 87.5 hours for the 2021-22 fiscal year. 
4. There are two steps to calculate your cash-out on March 31, 2022:
   • The first step is a March 31, 2022 cash-out of the 87.5 hours of excess leave you earned during the 2021-22 fiscal year (as per item 3 above). 
   • The second step is a March 31, 2022 cash-out of 20% of all unused excess leave (earned prior to March 31, 2021). In this sample calculation, that’s 16 hours (20% of 80 hours as per item 2 above), leaving you with 64 excess hours to carry over to the next fiscal year.
   • You will be paid at the applicable salary rate effective on March 31, 2022.
5. After the cash-out, on April 1, 2022 you will have 64 hours excess leave (earned prior to March 31, 2021).
6. In the 2022-23 fiscal year, let’s say you do not use any of your excess leave hours (earned prior to March 31, 2021), but you do use your entire entitlement of 187.5 new vacation leave hours earned during the 2022-23 fiscal year.
7. On March 31, 2023 you will still have 64 excess hours (earned prior to March 31, 2021). The system will cash-out 20% of that amount, meaning 12.8 hours will be cashed out. You will be paid at the applicable salary rate effective on March 31, 2023.
8. On April 1, 2023 you will have 51.2 hours excess leave.
9. The two processes (the normal annual cash-out and the 20% cash-out of hours earned prior to March 31, 2021) will repeat annually until March 31, 2026. On that date, all remaining excess hours earned before March 31, 2021 will be cashed out.

Sample compensatory leave cash-out calculation

Applies to: CP (formerly AV), IT (formerly CS), NR, RE, SH and SP groups

The following sample calculation depicts a compensatory leave bank cash-out.

NOTE: For the IT group (formerly CS group) the compensatory leave carry-over limit is 37.5 hours. For all other groups, there is no carryover allowed, so all compensatory hours unused at the end of a fiscal year are “excess”.

1. On March 31, 2021 – let’s say your compensatory leave bank had an excess of 50 hours (remember, for IT members this would mean you had a balance of 87.5 hours because you are allowed to carryover 37.5 hours).
2. Let’s also say you used 20 hours of this excess leave throughout the fiscal year, leaving you with 30 excess compensatory hours on March 31, 2022.
3. And finally, let’s say that you also earned 20 more compensatory hours throughout the fiscal year (2021-22) and, for the purposes of this example, used 10 hours, leaving an excess of 10 hours for the 2021-22 fiscal year.
4. There are two steps to understand your cash-out on March 31, 2022:
   • The first step is to think about the 10 hours of excess compensatory leave you accumulated during the fiscal year (per item 3 above).  All our collective agreements have provisions allowing a little extra time for us to use compensatory leave accrued each fiscal year. So, unlike the vacation leave cash-out, you should not be receiving a March 31, 2022 cash-out of unused compensatory leave credits earned during the 2021-22 fiscal year. You will have the normal amount of time to use these credits each year before cash-outs occur in the normal manner.  Here is a chart that explains when unused compensatory leave credits (earned each fiscal year) will be cashed out for each group: 
     
     ANNUAL (NORMAL) COMPENSATORY LEAVE CASH-OUTS

     Group	Compensatory  carryover max	Compensatory accumulation cut-off date	Compensatory pay-out date
     AV, NR	0	Mar 31	Next Dec 31
     CS	37.5	Mar 31	Next Sep 30
     RE, SP, SH	0	Mar 31	Next Sep 30

   • The second step is a March 31, 2022 cash-out of 20% of all unused excess compensatory leave (earned prior to March 31, 2021). In this sample calculation, that’s 6 hours (20% of 30 hours, per item 2 above), leaving you with 24 excess hours to carry over to the next fiscal year.
   • You will be paid at the applicable salary rate effective on March 31, 2022.
5. After the cash-out, on April 1, 2022 you will have 24 hours excess compensatory leave (earned prior to March 31, 2021).
6. In the 2022-23 fiscal year, let’s say you use 12 hours of your excess compensatory leave (earned prior to March 31, 2021).
7. On March 31, 2023 you will still have 12 unused excess hours (earned prior to March 31, 2021). The cash-out will be 20% of that amount, meaning 2.4 hours will be cashed out. You will be paid at the applicable salary rate effective on March 31, 2023.
8. NOTE: Any unused excess compensatory leave earned in all subsequent fiscal years will be managed per item 4. i. above.
9. On April 1, 2023 you will have 9.6 hours excess compensatory leave.
10. The 20% cash-out of excess hours (earned prior to March 31, 2021) will repeat annually until March 31, 2026, when all remaining unused excess hours will be cashed out. 

General FAQs