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 ESA. For more information on these job categories, please see the Special Rule Tool available at Ontario.ca/ESAtools.
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.
Employees earn a minimum of two weeks of 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 based on length of employment although a contract of employment or collective agreement might 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.
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.
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.
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).
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
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.
Riley was hired on February 24, 2014. 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, 2014 to June 30, 2014 must be taken within ten months of the end of the stub period (that is, within ten months of June 30, 2014). The vacation time Riley earned for the entitlement year July 1, 2014 to June 30, 2015 would have to be taken within ten months of the end of the vacation entitlement year (that is, within ten months of June 30, 2015).
If the deadline under the ESA for taking a vacation comes up when an employee is on pregnancy, parental, personal emergency, family caregiver, family medical, critically ill child care, organ donor, reservist or crime-related child death or disappearance 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.
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.
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.
The employer takes the number of days in the employee's usual work week and multiplies that number by 2.
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 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 with respect to the stub period is more than five days, five days must be taken consecutively and any additional days may be taken together with those five days 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.
Employees must receive a minimum of four per cent of the gross "wages" (excluding vacation pay) they earned in the 12 month vacation entitlement year or stub period for which the vacation is being given.
For example, suppose Janice works part-time and 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:
But do not include:
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:
When employment ends (for example, when an employee quits or his or her employment 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.
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).
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:
Employees may also agree in writing to work on a public holiday that falls while they are on vacation.
Because there is no break in the employment relationship during a period of pregnancy, parental, personal emergency, family caregiver, family medical, critically ill child care, organ donor, reservist or crime-related child death or disappearance 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.
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.
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 of 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, personal emergency, family caregiver, family medical, critically ill child care, organ donor, reservist or crime-related child death or disappearance 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.
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:
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:
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.
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