• ISBN: 978-1-4606-1988-9 (HTML)
  • ISBN: 978-1-4606-1987-2 (Print)
  • ISBN: 978-1-4606-1989-6 (PDF)
  • Revised: May 2013
  • Content last reviewed: May 2013
  • PDF VersionPDF [ 1.39 Mb / 200 pages | Download Adobe Reader ]

This guide is provided for your information and convenience only. It is not a legal document. For complete information, refer to the Employment Standards Act, 2000 and its regulations.

This employment standard has two parts: vacation time and vacation pay. Some employees have jobs that are exempt from the vacation with pay provisions of the Employment Standards Act, 2000 (ESA). (See the Special Rule Tool for information on these job categories.)

Employees are entitled to two weeks of vacation time after each 12-month vacation entitlement year. Ordinarily, a vacation entitlement year is a recurring 12-month period beginning on the date of hire. Where the employer has established an alternative vacation entitlement year that begins on a date other than the date of hire, the employee is also entitled to a pro-rated amount of vacation time for the period (called a "stub period") that precedes the alternative vacation entitlement year.

Vacation pay must be at least four per cent of the "gross" wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or stub period (where that applies).

An employee's contract of employment or a collective agreement may provide a greater right or benefit with respect to vacation time and/or pay.

An employee who does not complete either the full vacation entitlement year or the stub period (if any) does not qualify for vacation time under the ESA. However, employees earn vacation pay as they earn wages. So if an employee works even just one hour, he or she is still entitled to at least four percent of the hour's wages as vacation pay.

Key definitions:

  • Vacation entitlement year: the 12-month period over which employees earn vacation.
  • Standard vacation entitlement year: a recurring 12-month period beginning on the date of hire.
  • Alternative vacation entitlement year: a recurring 12-month period chosen by the employer to begin on a date other than the employee's date of hire (e.g. employee hired June 1 but employer selects alternative vacation entitlement year commencing September 1).
  • Stub period: Period between the date of hire and beginning of the first alternative vacation entitlement year or, the period between the end of a standard vacation entitlement year and the beginning of an alternative vacation entitlement year where the employer switches from a standard vacation entitlement year to an alternative vacation entitlement year. (e.g. If an employer has chosen an alternative vacation entitlement year that runs January 1 to December 31 and the employee is hired on September 1, the stub period will be September 1 to December 31.)

Vacation entitlement year and stub period will include time the employee spends away from work because of:

  • Layoff
  • sickness or injury
  • pregnancy, parental, family medical, organ donor, personal emergency, declared emergency, and reservist leaves
  • any other approved leaves (i.e. where there is no break in the employment relationship).

Vacation Time

Employees earn a minimum of two weeks vacation time upon completion of every 12-month vacation entitlement year. The ESA does not provide for any increases to the two-week vacation time entitlement although a contract of employment or collective agreement may do so.

If the vacation entitlement year is a standard vacation entitlement year, the employee will be entitled to a minimum of two weeks of vacation time after the 12 months following his or her date of hire and after each 12-month period thereafter.

If an employer establishes an alternative vacation entitlement year, the employee will be entitled to a minimum of two weeks of vacation time after each alternative vacation entitlement year but will also be entitled to a pro-rated amount of vacation time for the stub period preceding the start of the first alternative vacation entitlement year.

Calculating Stub Period Vacation Entitlements

When the employee has a regular work week

The vacation time entitlement for a stub period is calculated as two (2) weeks multiplied by the ratio (R) of the length of the stub period to 12 months.

Example:

  • Employee has a regular work week.
  • Employee hired September 1 and alternative vacation entitlement year begins January 1.
  • Stub period is September 1 to December 31 (4 months)

Calculation of vacation entitlement for stub period: 2 weeks × R (ratio of stub period to 12 months) where R = 4 months/12 months

2 weeks × 4/12 = 2/3 of a week.

When the employee does not have a regular work week

The vacation entitlement for a stub period is calculated as two weeks times the average number of days worked per work week during the stub period (A) multiplied by the ratio of the length of the stub period to 12 months (R).

Example:

  • Employee does not have a regular work week.
  • Employee hired September 1 and alternative vacation entitlement year begins January 1
  • Stub period is September 1 to December 31 and there are 17 work weeks in the stub period. The employee worked a total of 51 days in those 17 work weeks.

Calculation of vacation entitlement for stub period: 2 weeks × A × R where A = 51 days/17 work weeks and R = 4 months /12 months

2 weeks × 51/17 × 4/12 (or 2 weeks × 3 days/week × 1/3) = 2 days

Deadlines for taking vacation

The vacation time earned with respect to a completed vacation entitlement year or a stub period must be taken within 10 months following the completion of the vacation entitlement year or stub period. The employer has the right to schedule vacation as well as an obligation to ensure the vacation time is scheduled and taken before the end of that ten-month period.

For example:

Riley was hired on February 24, 2005. His employer established an alternative vacation entitlement year of July 1 to June 30. The pro-rated amount of vacation time that Riley earned for the stub period of February 24, 2005 to June 30, 2005 must be taken within ten months of the end of the stub period (that is, within ten months of June 30, 2005). The vacation time Riley earned for the entitlement year July 1, 2005 to June 30, 2006 would have to be taken within ten months of the end of the vacation entitlement year (that is, within ten months of June 30, 2006).

If the deadline under the ESA for taking a vacation comes up when an employee is on pregnancy, parental, family medical, organ donor, personal emergency, declared emergency, or reservist leave, the vacation must be taken when the leave ends or at a later date with the agreement (in writing) of the employer and the employee.

Likewise, if an employee's contract requires that some or all of his or her vacation must be taken within a specified period that comes up when the employee is on a leave and the employee would otherwise have to give up some or all of his or her vacation entitlements under the contract, the employee may defer taking the vacation until the leave ends or take it at a later date with the agreement (in writing) of the employer and employee.

Foregoing Vacation

An employee can give up some or all of his or her earned vacation time with the employer's written agreement and the approval of the Director of Employment Standards. This approval does not affect an employer's obligation to pay the employee vacation pay; employees may give up vacation time, but not the right to vacation pay.

How to Schedule The Vacation Time Earned With Respect to a Vacation Entitlement Year

Employers are required to schedule the vacation time earned each vacation entitlement year in a block of two weeks or in two one-week blocks unless the employee makes a written request, and the employer agrees in writing, to schedule the vacation in shorter periods. In that case, it is necessary to calculate the number of single vacation days the employee is entitled to.

Calculating the entitlement to single vacation days earned with respect to a vacation entitlement year:

When the employee has a regular work week

The employer takes the number of days in the employee's usual work week and multiplies that number by 2.

  • The employee regularly worked Monday, Wednesday and Friday or three days a week in the preceding vacation entitlement year.
  • The employee is therefore entitled to 6 single vacation days in respect of that vacation entitlement year.

When the employee does not have a regular work week

The employer calculates the average number days worked in each week in the most recently completed vacation entitlement year and then multiplies that number by 2.

  • The employee worked a total of 149 days in the preceding vacation entitlement year.
  • There are 52.18 weeks per year.
  • The average number of days worked per week in the year would be 149 days divided by 52.18 weeks per year = 2.86 days
  • The single vacation days the employee would be entitled to in respect of that year would be 2 ×  2.86 days or 5.72 days of vacation.

How to Schedule Vacation Time Earned with Respect to a Stub Period

The vacation time earned with respect to a stub period is calculated as single days based on the formulas set out under the heading Calculating Stub Period Vacation Entitlements.

If the amount of vacation time earned is between two and five days inclusive, the vacation days must be taken consecutively, unless the employee requests in writing and the employer agrees in writing to shorter periods.

If the amount of vacation time earned with respect to the stub period is more than five days, the first five days must be taken consecutively and any additional days may be taken together with the first five or in a separate period of consecutive days. However, the employee may request in writing and the employer may then agree to schedule the vacation in shorter periods.

Vacation Pay

Employees must receive a minimum of four per cent of the gross "wages" (excluding vacation pay) they earned in the 12 months vacation entitlement year or stub period for which the vacation is being given.

For example, suppose Janice earned gross wages of $16,000.00 in her vacation entitlement year. She is entitled to four per cent of $16,000.00 as vacation pay--$640.00.

If an employee's contract or collective agreement provides a better vacation benefit than the minimum required, the employee may be entitled to a higher percentage of his or her gross earnings for vacation pay. For example, an employee might be entitled under his or her contract to three weeks' vacation, with six per cent of gross earnings for vacation pay.

The gross "wages" on which vacation pay is calculated include:

  • regular earnings, including commissions;
  • bonuses and gifts that are non-discretionary or are related to hours of work;
  • overtime pay;
  • public holiday pay;
  • termination pay; and
  • allowances for room and board.

But do not include:

  • vacation pay paid out or earned but not yet paid;
  • tips and gratuities;
  • discretionary bonuses and gifts that are not related to hours of work, production or efficiency (e.g. a Christmas bonus unrelated to performance);
  • expenses and traveling allowances;
  • living allowances;
  • contributions made by an employer to a benefit plan and payments from a benefit plan (e.g. sick pay) that an employee is entitled to;
  • federal employment insurance benefits;
  • severance pay.

When to Pay Vacation Pay

In most cases, the vacation pay earned during a completed vacation entitlement year or stub period must be paid to an employee in a lump sum sometime before he or she takes the vacation time earned. There are four exceptions:

  1. When the vacation time is being taken in periods of less than one week.
    • In this case, the employee must be paid vacation pay on or before the payday for the period in which the vacation falls.
    • For example, Alvaro is taking vacation from January 1 to January 3, and the normal payday that covers this period is January 30. Alvaro must be given his vacation pay on or before January 30.
  2. When the employee has agreed in writing that his or her vacation pay will be paid on each pay cheque as it accrues (accumulates).
    • In this case, the employee's wage statement must show clearly the amount of the vacation pay being paid. This amount must also be shown separately from any other amounts paid.
    • The employer can also issue a separate wage statement for the vacation pay being paid.
  3. If the employee agrees in writing, the employer can pay the vacation pay at any time agreed to by the employee.
  4. If the employer pays the employee his or her wages by direct deposit into an account at a financial institution.
    • In this case, the employee must be paid vacation pay on or before the payday for the period in which the vacation falls.

When Employment Ends

When employment ends (for example, when an employee quits or is terminated), an employee is entitled to be paid the vacation pay that she has earned and that has not yet been paid out. In some cases this would include vacation pay earned during a previous vacation entitlement year or stub period as well as the vacation pay earned during the current vacation entitlement year or stub period. Vacation pay is also payable on termination pay but not on severance pay.

The unpaid vacation pay must be paid either within seven days of the employment ending or on what would have been the employee's next pay day, whichever is later.

Paying vacation pay owing when employment ends

Jenna was hired on April 1, 2005 and had a standard vacation entitlement year. On March 31, 2006 she had earned two weeks of vacation time and 4% of the wages earned in the vacation entitlement year as vacation pay. Her employer scheduled her vacation for the two-week period beginning June 1 and her vacation pay was to be paid prior to the commencement of that vacation. However, Jenna quit her employment on May 15, 2006. When she quit, her employer was required to pay her the vacation pay earned in the vacation entitlement year April 1, 2005 to March 31, 2006 plus the vacation pay earned in her last (incomplete) vacation entitlement year (being 4% of the wages she earned between April 1, 2006 and May 15, 2006).

Vacation and Public Holidays

A public holiday could fall during an employee's vacation period. In that case, the day remains a vacation day for the employee, and if the employee qualifies for the public holiday, the employee is entitled to one of the following:

  • The employee can have a substitute day off work with public holiday pay. This must be taken within three months of the public holiday or, if the employee agrees in writing, within 12 months of the public holiday;
    or
  • the employer can pay public holiday pay for that day without giving the employee a substitute day off work, if the employee agrees in writing.

Employees may also agree in writing to work on a public holiday that falls while they are on vacation.

Vacation and Leaves of Absence

Because there is no break in the employment relationship during a period of pregnancy, parental, family medical, personal emergency, organ donor, declared emergency, or reservist leave, the time on leave counts toward the completion of a vacation entitlement year or stub period. For example, an employee on leave for all or only part of a vacation entitlement year would have earned a full two weeks of vacation time at the end of the vacation entitlement year. The vacation pay earned during that vacation entitlement year would be a minimum of 4% of any wages actually earned during the year.

Where an employee's contract provides that "paid vacation" is earned through active service (e.g. 1.5 paid vacation days for each month of service or 3 weeks paid vacation for each year of service) an employee on leave may not earn either vacation time and/or pay while on leave. However, at the end of the vacation entitlement year or stub period, the employer must ensure the employee receives the greater of what was in fact earned under the contract and the minimum vacation time, and vacation pay, he or she would have earned under the ESA.

When a contract of employment provides a greater right to vacation based on active service

Ingrid's contract of employment provides that she earns two paid vacation days for every month of active service. In other words, vacation time and vacation pay are earned together through active service. Ingrid is on a pregnancy/ parental leave for 6 months of her vacation entitlement year.

Although Ingrid's length of service continues to accrue while she is on pregnancy and parental leave, she is not credited with "active" service while on leave.

At the end of her vacation entitlement year her employer determines that she has earned 12 paid vacation days under her contract of employment. Because she regularly works 5 days a week, she has earned enough vacation time under her contract to exceed the two-week minimum required under the ESA. In addition, the employer is able to show that 12 days of regular wages exceeds 4% of the wages she had actually earned during the vacation entitlement year.

Employee must receive at least 2 weeks of vacation time with 4% vacation pay

Tony earns 3 weeks of paid vacation for every year of active service. He is on a parental leave for 8 months of his vacation entitlement year. Under his contract of employment Tony earned 1/3 of the 3 weeks paid vacation he would otherwise earn in a year. In other words, he earned 1 week of paid vacation for the vacation entitlement year. However, his employer must ensure that Tony receives at least the minimum ESA vacation entitlements of 2 weeks of vacation time and 4% vacation pay. The employer will therefore have to provide Tony with another week of vacation time and ensure the week of vacation pay earned under the contract is not less than 4% of the gross wages he had actually earned in the vacation entitlement year.

An employee who is on a pregnancy, parental, family medical, organ donor, personal emergency, declared emergency, or reservist leave has the right to defer taking her or his vacation entitlement until the leave of absence expires (or until some later date if the employer and employee agree). This is the case even if the employee's contract of employment states that the employee is not allowed to defer taking vacation or restricts an employee's ability to do so.

This means that an employee who is on a leave of absence under the ESA will not lose any vacation time or vacation pay because he or she is on a leave. It also ensures that an employee does not have to choose between taking less than his or her full leave entitlement and losing some or all of his or her vacation pay or vacation time.

An employee who has the right to defer vacation until the expiry of a leave of absence may forego his or her right to take vacation time, with the agreement of the employer and the approval of the Director of Employment Standards, Ministry of Labour. However, an employee cannot forego his or her right to be paid vacation pay.

Requesting Statements of Vacation Records

Employers are required to keep records of the vacation time earned since the date of hire but not taken before the start of the vacation entitlement year, the vacation time earned and vacation time taken (if any) during the vacation entitlement year (or stub period), and the balance of vacation time remaining at the end of the vacation entitlement year (or stub period).

The employer must also keep records of the vacation pay paid to the employee during the vacation entitlement year (and stub period, if any) and how that vacation pay was calculated. These records must be made no later than seven days after the start of the next vacation entitlement year (or first vacation entitlement year if the records relate to a stub period) or the first pay day after the stub period or vacation entitlement year ends, whichever is later.

Employees may request (in writing) a statement containing the information in the employer's vacation records. The employer is required to provide the information no later than:

  • seven days after the request, or
  • the first pay day after the employee makes the request,

whichever is later, but subject to the following:

If the employee asks for information concerning the current vacation entitlement year or stub period, the employer is required to provide the information no later than:

  • seven days after the start of the next vacation entitlement year (or first vacation entitlement year in the case of a stub period), or
  • the first pay day after the stub period or vacation entitlement year ends,

whichever is later.

The employer is required to provide the information with respect to each vacation entitlement year or stub period only once.

If the employee has agreed that vacation pay will be paid on each pay cheque as it is earned, the employer does not need to keep records and provide statements about vacation pay as discussed above. Instead, the employer must report the vacation pay that is being paid separately from the amount of other wages on each wage statement, or provide a separate statement setting out the vacation pay that is being paid. The employer must also keep a record of that information.

Previous | Next