This workbook has been prepared to assist employers and employees in understanding some of their obligations and rights under the Employment Standards Act (ESA) and its regulations. It does not take the place of the ESA and its regulations and it should not be considered to offer any legal advice on your particular situation.
Under the Employment Standards Act (ESA), most employees are entitled to receive two weeks of vacation for each 12 months of employment, whether or not active. Most employees are also entitled to vacation pay equal to at least four per cent of the wages earned during that year. However, some employees work in jobs that are not covered by the ESA’s vacation with pay provisions. To see if this exemption applies to you, please see the Special Rule Tool.
This employment standard has two parts: vacation time and vacation pay. 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.
If 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 perio") that precedes the alternative vacation entitlement year.
Vacation pay must be at least four per cent of the wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or stub period (where that applies).
IMPORTANT NOTE: An employee’s vacation entitlement year and stub period includes time the employee spends away from work because of layoff, sickness or injury, leaves of absence (e.g., pregnancy, parental, family medical, etc.), or any other approved leaves where there is no break in the employment relationship.
Employees earn a minimum of two weeks vacation time upon completion of every 12-month vacation entitlement year. The Employment Standards Act (ESA) does not provide for any increases to the two-week vacation time entitlement, although an employee’s 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 month-period that started with his or her date of hire, and after each future 12-month period.
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. The employee 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.
An employee's contract of employment or collective agreement may provide a greater right or benefit with respect to vacation time 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 who is paid by the hour works even just one hour, he or she is still entitled to an amount equal to four per cent of the hour's wage as vacation pay.
Example 1: When the employee has a regular work week
The vacation time entitlement for a stub period is calculated as two weeks multiplied by the ratio (R) of the length of the stub period to 12 months.
Therefore, the employee is entitled to 0.67 of a week off in vacation for the stub period.
Example 2: When the employee does not have a regular work week
The vacation entitlement for a stub period is calculated as two weeks multiplied by 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).
The vacation time earned with respect to a completed vacation entitlement year or a stub period must be given within 10 months following the completion of the vacation entitlement year or stub period. An employer has the right to schedule when employees take vacation, subject to their obligation to ensure the vacation time taken before the end of that 10-month period.View an 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 10 months of the end of the stub period (that is, within 10 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 10 months of the end of that vacation entitlement year (i.e., within 10 months of June 30, 2006).
If the deadline for giving a vacation comes up when an employee is on leave (e.g. pregnancy, parental, family medical, etc.), the vacation must be taken when the leave ends or, if the employer and the employee agree in writing, at a later date.
Likewise, if an employee's contract requires that his or her vacation must be taken within a specified period or be lost, and that period ends while the employee is still on leave, the employee may, despite the contract, postpone the vacation until the leave ends or, if the employer and employee agree in writing, until an even later date.
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 Ministry of Labour’s 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.
IMPORTANT NOTE: Generally, employers are required to schedule the vacation time earned in each vacation entitlement year in a block of two weeks or in two one-week blocks. However, if the employee makes a written request and the employer agrees in writing, he or she can 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.
Example 1: 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 two.
Calculating the entitlement to single vacation days earned:
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 two.
Calculating the entitlement to single vacation days earned:
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 in the chapter on “Vacation” in Your Guide to the Employment Standards Act, 2000.
If the amount of vacation time earned is between two and five days, the vacation days must be taken consecutively, unless the employee requests in writing that they not be taken consecutively and the employer agrees in writing.
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. Any additional days must be taken either together with the first five or in a separate period of consecutive days, unless:
For vacation pay, employees must receive a minimum of four per cent of the wages they earned in the 12-month vacation entitlement year or stub period for which the vacation is being given.
Example: Suppose Janice earned gross wages of $16,000 in her vacation entitlement year. She is entitled to four per cent of $16,000 as vacation pay, or $640.
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 wages on which vacation pay is calculated include, but are not limited to:
They do not include vacation pay or severance pay (even though these are considered “wages” under the ESA). Note also that the following amounts, which are not considered “wages” under the ESA, are not included in the calculation of 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:
When employment ends (e.g., when an employee quits, or his or her employment is terminated), an employee is entitled to vacation pay that he or she has earned and 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. Remember that vacation pay is payable on termination pay, but not on severance pay.
IMPORTANT NOTE: The unpaid vacation pay must be paid not later than the seventh day after the employment ended or the day that would have been the employee's next pay day, whichever of those days is later.
Jenna was hired on April 1, 2012, and had a standard vacation entitlement year. She was paid biweekly. As of March 31, 2013, she had earned two weeks of vacation time and four per cent 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, 2013, and her vacation pay was to be paid prior to the start of that vacation. However, Jenna quit her employment on May 15, 2013. When she quit, her employer was required to pay her the vacation pay earned in the vacation entitlement year April 1, 2012, to March 31, 2013, plus the vacation pay earned in her last (incomplete) vacation entitlement year (being four per cent of the wages she earned between April 1, 2013, and May 15, 2013). May 17, 2013 would have been Jenna’s next pay day, while May 22 is the seventh day after her employment ended. Since May 22 is later than May 17, Jenna’s vacation pay must be paid by no later than May 22, 2013.
Because the employment relationship continues during a leave of absence (e.g., pregnancy, parental, family medical, etc.), the time on leave counts toward the completion of a vacation entitlement year or stub period. For example, an employee on leave for some or even all of a vacation entitlement year would still have earned a full two weeks of vacation time by the end of that year. The vacation pay earned during that vacation entitlement year would be a minimum of four per cent of any wages actually earned during the year (which would be nil if the employee was on leave for the entire year and the leave was unpaid).
A contract between an employer and employee may stipulate that paid vacation is earned through active service (e.g., 1.5 paid vacation days for each month of service or three weeks paid vacation for each year of service). Such a contract may not allow an employee to earn vacation time or pay while on leave. However, because an employer and employee are not permitted to contract out of a minimum employment standard, the employer must ensure the employee receives the greater of:
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 and then parental leave for a total of six months of her vacation entitlement year.
At the end of her vacation entitlement year, she has earned 12 paid vacation days under her employment contract. Because she regularly works five days a week, she has earned enough vacation time under her contract to exceed the two-week minimum required under the ESA (which would have amounted to only 10 vacation days). In addition, the wages paid as a result of having 12 days of paid vacation exceeds four per cent of the wages she had actually earned during the vacation entitlement year. (Since Ingrid’s leave was unpaid, she earned wages during only six months of the year; 4% of those wages would be roughly equal to 5 days’ wages.)
Tony earns three weeks of paid vacation for every year of active service. He is on a parental leave for eight months of his vacation entitlement year. Under his contract of employment, Tony earned one-third of the three weeks’ paid vacation he would otherwise earn in a year. In other words, he earned one 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 two weeks’ of vacation time and four per cent 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 four per cent of the wages he had actually earned in the vacation entitlement year. (In this case, it is unlikely that any more vacation pay is due, as 4% of the wages earned in a four-month period will generally be less than one week’s pay.)
Employers are required to keep records for each employee of:
The amount of wages on which the vacation pay was calculated and the period of time to which those wages relate. Where there was a “stub period” (see above), the employer is also required to keep records for each employee of:
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 a statement in writing containing the information in the employer's vacation records. The employer is required to provide the information no later than the later of:
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 the later of:
IMPORTANT NOTE: The employer is required to provide the information with respect to a vacation entitlement year or stub period only once.
If the employee has agreed in writing that vacation pay that accrues during a pay period will be paid on the pay day for that pay period, the employer does not have to:
Reminder: In this situation, the employer needs to:
The employer must also keep a record of the vacation pay information set out in the wage statement or in a separate statement, as the case may be.
Questions? Call the Employment Standards Call Centre at 1-800-531-5551