I once worked for a similar group of highly related companies.  The employees were all employees of one company, which billed their time to the others as subcontractors, to avoid this issue.

The legal issues may depend on which province the employee is working in, and how related the companies are.  

In the case of acquisition of one company by another, in most jurisdictions the employee's length of service transfers, for instance.

I have experience in a similar type of situation and have always paid out the accrued vacation. You have to do an ROE for the company that the employee left and start a new record in the 2nd company. It depends on what you mean by 'entities' - if each has a different business number then you cannot transfer from one to another.

I did this manually.  I processed a reduction to the employee's accrual, did a J/E in companyA to transfer the liability to companyB, then processed an increase the employee's accrual in CompanyB and a J/E in CompanyB to show the decrease in liability from companyA.  I still did an ROE, but I made a notation in the comments that the vacation accrual was transferred.

Hi ECR_Jess,

If any suggestions provided in this thread are able to help you resolving your issue, would you please click the 'Yes' button to the question - 'Did this answer the question?'  The thread will be marked as answered, which will benefit other users who have the same issue.  Thanks a lot.