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Vacation with Pay

  • Issued: September 2010
  • Content last reviewed: January 2018
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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 with less than five years of employment are entitled to receive two weeks of vacation for each 12 months of employment, whether or not active. Most employees with less than five years of employment are also entitled to vacation pay equal to at least four per cent of the wages earned during that year. Most employees with five years or more of employment are entitled to receive three weeks of vacation for each 12 months of employment and vacation pay equal to at least six per cent of the wages earned 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.

Vacation Time and Vacation Pay

This employment standard has two parts: vacation time and vacation pay. Employees with less than five years of employment are entitled to two weeks of vacation time after each 12-month vacation entitlement year. Employees with five or more years of employment are entitled to three weeks of vacation time. 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 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) for employees with less than five years of employment. Employees with five or more years of employment at the end of a 12-month vacation entitlement year or stub period (if any) are entitled to at least six per cent of the gross wages earned in the 12-month vacation entitlement year or stub period.

An employee's contract of employment or collective agreement may provide a greater right or benefit for vacation time or 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 the employee’s 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 January 1).
  • Stub Period: Period between:
    • Date of hire and beginning of the first alternative vacation entitlement year; or
    • End of a standard vacation entitlement year and the beginning of an alternative vacation entitlement year where the employer switches from the former to the latter.
      • Example: if an employer has chosen an alternative vacation entitlement year that runs January 1 to December 31, and the employee was hired on September 1, the stub period will be September 1 to December 31.

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.

Transitional Rules

The increased entitlements to vacation time and vacation pay (three weeks’ vacation time and six per cent vacation pay) for employees with five or more years of employment only apply to vacation entitlement years or stub periods that end on or after December 31, 2017. Employers are not required to provide the increased entitlements for any vacation entitlement year or stub period that ended before December 31, 2017.

Example 1

On March 1, 2017, Oakley had completed four years of employment with his employer. He has an alternative vacation entitlement year that runs from November 1 to October 31. Oakley was entitled to two weeks of vacation time and four per cent vacation pay (accrued on the wages earned during the vacation entitlement year) upon completing the vacation entitlement year that began November 1, 2016 and ended October 31, 2017.

However, for the vacation entitlement year that began on November 1, 2017 and ends on October 31, 2018, Oakley is entitled to three weeks of vacation time and six per cent vacation pay accrued on the wages earned during that vacation entitlement year. This is because he had five years of employment upon completing the vacation entitlement year and because that vacation entitlement year ended on or after December 31, 2017. Oakley is entitled to three weeks of vacation time and six per cent vacation pay upon the completion of each vacation entitlement year thereafter.

Example 2

Jamieson was hired by his employer on June 1, 2001. He has a standard vacation entitlement year that runs from June 1 to May 31. He earned two weeks of vacation time and four per cent vacation pay (accrued on the wages earned during the vacation entitlement year) upon completing each of the vacation entitlement years between his date of hire and May 31, 2017. Despite the fact that he had more than five years employment as of May 31, 2006, Jamieson was not entitled to the increased vacation entitlements for vacation entitlement years that ended prior to December 31, 2017.

However, for the vacation entitlement year that began on June 1, 2017 and ended May 31, 2018, Jamieson earned three weeks of vacation time and six per cent vacation pay (accrued on all the wages earned during that vacation entitlement year) because that vacation entitlement year ended on or after December 31, 2017.

Jamieson is entitled to three weeks of vacation time and six per cent vacation pay on completion of each vacation entitlement year thereafter.

Vacation Time

An employee, whose period of employment is less than five years, earns a minimum of two weeks of vacation time on completion of every 12-month vacation entitlement year. An employee, whose period of employment is five years or more, earns a minimum of three weeks of vacation time on completion of every 12-month vacation entitlement year. 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 12 months after the date of hire and after completing each of the next four 12-month vacation entitlement years.  The employee will then be entitled to three weeks of vacation after completing the fifth vacation entitlement year and for each vacation entitlement year thereafter.

Example: standard vacation entitlement year

Ava is hired on June 1, 2014.  She has a standard vacation entitlement year that runs from June 1 of each year to May 31 of the following year:

Ava earns two weeks of vacation time upon completion of her first vacation entitlement year June1, 2014 to May 31, 2015 and two weeks in each of the following three vacation entitlement years:

  • June 1, 2015 to May 31, 2016
  • June 1, 2016 to May 31, 2017
  • June 1, 2017 to May 31, 2018

On May 31, 2019, Ava has completed five years of employment and so will be entitled to three weeks of vacation on the completion of her vacation entitlement year June 1, 2018 to May 31, 2019.  Her vacation time entitlement will be three weeks for each completed vacation entitlement year thereafter.

If an employer establishes an alternative vacation entitlement year when an employee is hired, the employee will be entitled to a pro-rated amount of two weeks’ vacation time for the stub period preceding the start of the first alternative vacation entitlement year.  The employee will then be entitled to a minimum of two weeks of vacation time after completing each alternative vacation entitlement year until the employee reaches the five-year employment threshold.  The employee will then be entitled to a minimum of three weeks of vacation time for that vacation entitlement year and each vacation entitlement year thereafter.

Example: alternative vacation entitlement year

Jocelyn was hired on September 1, 2017. The employer has established an alternative vacation entitlement year that runs from January 1 to December 31. That means that Jocelyn’s stub period is from September 1, 2017 to December 31, 2017. She is entitled to a pro-rated vacation based on two weeks for the stub period. (See how to calculate this entitlement under the heading “How to Calculate Stub Period Vacation Entitlements”.)  Jocelyn’s first vacation entitlement year will be January 1, 2018 to December 31, 2018. On completing those 12 months, she will have earned two weeks of vacation time for the vacation entitlement year because she has been employed for less than 5 years. Jocelyn will have completed five years of employment on August 31, 2022.

Jocelyn will also be entitled to two weeks of vacation time on completing each of the following vacation entitlement years:

  • January 1 to December 31, 2019
  • January 1 to December 31, 2020
  • January 1 to December 31, 2021

Since Jocelyn will have reached the five-year employment threshold on August 31, 2022, she will be entitled to three weeks of vacation time for the completed vacation entitlement year ending on December 31, 2022. Her vacation time entitlement for each completed vacation entitlement year thereafter will also be three weeks.

Note: 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, they are still entitled to four per cent or six per cent of the hourly wage as vacation pay.

How to Calculate Stub Period Vacation Entitlements

When the employee has a regular work week

The vacation time entitlement for a stub period is calculated as two or three weeks (two weeks for employees with less than five years of employment and three weeks for employees with five or more years of employment) multiplied by the ratio (R) of the length of the stub period up to 12 months.

Note: The calculation of the stub period entitlement will be based on three weeks of vacation only if an employer converts from a standard vacation entitlement year to an alternative vacation entitlement year and the employee has five or more years of employment on completion of the stub period (see example 2 below).

Example 1

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

Calculating Entitlement

  • R = 4 months/12 months
  • 2 weeks × 4/12 = 2/3 of a week.

Therefore, the employee is entitled to 0.67 of a week off in vacation for the stub period.

Example 2

  • Employee has a regular work week.
  • Employee hired September 1, 2014 and has a standard vacation entitlement year that runs September 1 to August 31 each year.
  • The employer advises that at the end of the employee’s fifth year of employment (August 31, 2019) the employee will be switching to an alternative vacation entitlement year beginning January 1, 2020. [Note: The employee had five years of employment upon completion of the standard vacation entitlement year that ended August 31, 2019 and so was entitled to three weeks’ vacation in respect of the vacation entitlement year that began September 1, 2018 and ended August 31, 2019.]
  • The employee’s stub period preceding the alternative vacation entitlement year runs from September 1, 2019 to December 31, 2019.
  • The employee will have more than five years of employment upon completion of the stub period so will be entitled to a pro-rated amount of three weeks in respect of that stub period calculated as follows:

Calculation of vacation entitlement for stub period: 3 weeks X R (ratio of stub period to 12 months) where R = 4 months(September 1 to December 31) divided by 12 months.

3 weeks X 4/12 = one week

When the employee does not have a regular work week

The vacation entitlement for a stub period is calculated as two or three weeks (two weeks for employees with less than five years of employment and three weeks for employees with five or more years of employment) 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).

Note: The calculation of the stub period entitlement will be based on three weeks of vacation only if an employer converts from a standard vacation entitlement year to an alternative vacation entitlement year and the employee has five or more years of employment on completion of the stub period.

  • Employee does not have a regular work week
  • Employee hired September 1 and alternative vacation entitlement year begins the folloing 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.

Calculating Entitlement

  • A = 51 days/17 work weeks
  • R = 4 months/12 months
  • 2 weeks × [(51/17) × (4/12)] = 2 days

Deadlines for Giving Vacation

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.

Example

Riley was hired on February 24, 2018. 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, 2018 to June 30, 2018 must be taken within 10 months of the end of the stub period (that is, within 10 months of June 30, 2018). The vacation time Riley earned for the entitlement year July 1, 2018 to June 30, 2019, would have to be taken within 10 months of the end of that vacation entitlement year (i.e., within 10 months of June 30, 2019).

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 electronically or in writing, at a later date.

Likewise, if an employee's contract requires that their 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 electronically or in writing, until an even later date.

Scheduling Vacation Time Earned with Respect to a Vacation Entitlement Year


IMPORTANT NOTE: For employees whose period of employment is less than five years, employers are required to schedule the vacation time, earned for each vacation entitlement year, in a block of two weeks or in two one-week blocks. For employees whose period of employment is five years or more, employers are required to schedule the vacation time earned for each vacation entitlement year in a block of three weeks or a two-week period and a one-week period, or three periods of one week each. However, if the employee makes an electronic or written request, and the employer agrees electronically or in writing, the employee 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.

Calculating the entitlement to single vacation days earned for a vacation entitlement year

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.[1]

Calculating the entitlement to single vacation days earned:

  • 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 six single vacation days in respect of that vacation entitlement year (i.e., 3 days × 2[2]= 6 days).

Example 2: 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 two.[3]

Calculating the entitlement to single vacation days earned:

  • 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 ÷ 52.18 weeks per year = 2.86 days
  • The single vacation days the employee would be entitled to for that year would be:
    2[4] × 2.86 days or 5.72 days of vacation.

[1][2][3][4]The above examples apply to an employee with less than five5 years of employment. Multiply by three3 for employees with five5 or more years of employment.

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 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 electronically or in writing that they not be taken consecutively and the employer agrees electronically or 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:

  • the employee requests electronically or in writing that the vacation days not be taken in shorter periods; and
  • the employer agrees in writing.

Foregoing Vacation

An employee can give up some, or all, of their earned vacation time with the employer's electronic or 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.

Vacation Pay

Employees must receive a minimum of either four per cent or six 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 as follows:

  • An employee whose period of employment is less than five years on completion of a vacation entitlement year or stub period is entitled to vacation pay calculated as four per cent of all the wages (excluding vacation pay) earned in the vacation entitlement year or stub period.
  • An employee whose period of employment is five years or more on completion of a vacation entitlement year or period is entitled to vacation pay calculated as six per cent of all the wages (excluding vacation pay) earned during the vacation entitlement year or stub period.
  • An employee who reaches the five-year employment threshold part way through the vacation entitlement year or stub period is entitled to vacation pay calculated as six per cent of all the wages (excluding vacation pay) earned in the vacation entitlement year or stub period. (It doesn’t matter whether the employee’s period of employment was five years or more when the vacation entitlement year or stub period commenced. It also doesn’t matter if the employee reached the five-year employment threshold part way through the vacation entitlement year or stub period.)

Example 1: employee has less than five years of employment on completion of a vacation entitlement year

Janice works part-time and earned gross wages of $16,000 in her vacation entitlement year. She is entitled to four per cent of $16,000 as vacation pay: $640.

Example 2: employee has less than five years of employment on completion of a stub period

Jocelyn was hired on September 1 and her employer has established an alternative vacation entitlement year that runs from January 1 to December 31. This means Jocelyn’s stub period is from September 1 to December 31. She earned $13,050 in the stub period .She is entitled to four per cent of $13,050 as vacation pay: $522.

Note: Jocelyn’s first vacation entitlement year is January 1 to December 31. When she completes that vacation entitlement year, she will have earned four per cent vacation pay on her wages in that vacation entitlement year because she has been employed for less than five years.

Example 3: employee has more than five years of employment on completion of a vacation entitlement year

Quinn, a part-time worker who has been employed for seven years with his employer, earned gross wages of $16,000 during his vacation entitlement year. He is entitled to six per cent of $16,000 as vacation pay: $960.

Example 4: employee reaches five-year employment threshold part way through a vacation entitlement year

Andrew has been employed for four years at the start of his current vacation entitlement year, but reaches the five-year employment threshold part way through that year. He earned gross wages of $16,000 in this vacation entitlement year. He is entitled to six per cent of $16,000 as vacation pay: $960.

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 their gross earnings for vacation pay. For example, an employee might be entitled under their contract to four weeks’ vacation, with eight per cent of gross earnings for vacation pay.

The wages on which vacation pay is calculated include, but are not limited to:

  • Regular earnings, including commissions
  • Bonuses and gifts that are non-discretionary or are related to hours of work, production or efficiency
  • Overtime pay
  • Public holiday pay
  • Termination pay and
  • Allowances for room and board

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:

  • 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 and
  • 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 they take 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 2 to January 8 inclusive, and the normal payday that covers this period is January 30. Alvaro must be given his vacation pay on or before Jan. 30.
  2. When the employee has agreed electronically or in writing that their vacation pay will be paid on each pay cheque as it 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.

Alternatively, the employer can provide a separate wage statement for the vacation pay being paid.

Note: An employee whose period of employment is less than five years, and who is paid accrued vacation pay on each pay day, is entitled to be paid four per cent of the wages earned in each pay period as vacation pay. When the employee reaches the five-year period of employment threshold, the employee’s entitlement increases to six per cent vacation pay on all wages earned in the vacation entitlement period. As a result, the employee is entitled to an additional two per cent of the wages earned in the vacation entitlement period to the date the five-year period of employment threshold was reached. In addition, the employee is entitled to be paid six per cent vacation pay on the wages earned from that date forward.

Example: payment of vacation pay on a pay period by pay-period basis

  • Fraser’s vacation entitlement year is January 1 to December 31.
  • Fraser reached his five- year period of employment threshold on July 1.
  • Fraser was paid four per cent vacation pay each pay day on the wages earned between January 1 and June 30.
  • On July 1, when Fraser reached his five- year period of employment threshold, his vacation pay entitlement for that vacation year increased from four per cent to six per cent onf all the wages earned in the vacation entitlement year.
  • Fraser’s employer must “top-up” the four per cent vacation pay on the wages he earned between January 1 and June 30 with an additional two per cent vacation pay. This additional vacation pay is due on the pay day for the pay period in which July 1 falls.
  • Fraser will then be paid six per cent vacation pay for each pay day on the wages earned from July 1 to December 31.
  1. If the employee agrees electronically or in writing, the employer can pay the vacation pay at any time agreed to by the employee.
  2. If the employer pays the employee their 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 (e.g., when an employee quits, or their employment is terminated), an employee is entitled to vacation pay that they have 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.

An employee, whose employment is terminated during a vacation entitlement period, and before the employee has reached the five-year threshold, will be entitled on termination to vacation pay calculated as four per cent of the wages earned during that last (partially completed) vacation entitlement period (plus any outstanding vacation pay earned in previously completed vacation entitlement periods).

An employee, who reached the five-year period of employment threshold before or during the last (partially completed) vacation entitlement period, and prior to being terminated, would be entitled to six per cent of all the wages earned in that last (partially completed) vacation entitlement (plus any outstanding vacation pay earned in previously completed vacation entitlement periods).

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.

Paying Vacation Pay Owing When Employment Ends

Example 1: employee’s period of employment less than five years on termination of employment

Jenna was hired on April 1, 2017, and had a standard vacation entitlement year. She was paid biweekly. As of March 31, 2018, 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, 2018, and her vacation pay was to be paid prior to the start of that vacation. However, Jenna quit her employment on May 15, 2018. When she quit, her employer was required to pay her the vacation pay earned in the vacation entitlement year April 1, 2017, to March 31, 2018, plus the vacation pay earned in her last (incomplete) vacation entitlement year (being four per cent of the wages she earned between April 1, 2018, and May 15, 2018).

This vacation pay must be paid within seven days of the date Jenna quit or by what would have been Jenna’s next pay day, whichever is later. If May 17, 2018 would have been Jenna’s next pay day and May 22 is the seventh day after her employment ended, Jenna’s vacation pay must be paid by no later than May 22, 2018.

Example 2: employee’s period of employment five years or more on termination of employment

Dini was hired on June 1, 2013 and had an alternative vacation entitlement year that ran annually from January 1 to December 31. He reached his five-year employment threshold on May 31, 2018. His employment was terminated on August 1, 2018. He had no vacation pay outstanding for any previously completed vacation entitlement years. Dini’s vacation pay for his last partially completed vacation entitlement year is six per cent of his wages earned between January 1, 2018 and August 1, 2018 because he had reached the five-year employment threshold prior to the termination.

Note: This vacation pay must be paid within seven days of the date Dini was terminated or by what would have been Dini’s next pay day, whichever is later.

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 electronically or 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 electronically or in writing.

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

Vacation and Leaves of Absence

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 or three weeks of vacation time (depending on the employee’s length of employment) by the end of that year. The vacation pay earned during that vacation entitlement year would be a minimum of four per cent or six per cent (depending on the employee’s length of employment) of any wages (excluding vacation pay) earned during the year (which would be zero 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:

  • the vacation time and pay that was earned under the contract; or
  • the minimum vacation time and vacation pay they would have earned under the ESA.

Example: when 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 and then parental leave for a total of six months of her vacation entitlement year.

At the end of her vacation entitlement year, Ingrid 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 for an employee whose period of employment is less than five years (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; four per cent of those wages would be roughly equal to five days’ wages.)

Example: employee must receive at least minimum vacation entitlements under the ESA

Tony’s contract provides that he 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. At the end of that vacation entitlement year, his period of employment is four years. 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 for an employee whose period of employment is less than five years. 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 four per cent of the wages earned in a four-month period will generally be less than one week’s pay.)

Vacation Records

Employers are required to keep records for each employee 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 during the vacation entitlement year; the vacation time taken (if any), during the vacation entitlement year;
  • the balance of vacation time remaining at the end of the vacation entitlement year;
  • the vacation pay earned during vacation entitlement year and how the amount was calculated;
  • the vacation pay paid during the vacation entitlement year;
  • the amount of wages on which the vacation pay was calculated and the period of time to which those wages relate;
  • the vacation records must be kept for five years

Where there was a “stub period” (see above), the employer is also required to keep records for each employee of:

  • the vacation time earned during the stub period;
  • the vacation time (if any) taken during the stub period;
  • the vacation time (if any) earned but not taken during the stub period;
  • the vacation pay earned during stub period and how that amount was calculated;
  • the vacation pay paid during the stub period;
  • the amount of wages on which the vacation pay was calculated and the period of time to which those wages relate.

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 electronically or 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:

  • seven days after the request; or,
  • the first pay day after the employee makes the request 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 the later of:

  • 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.

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 electronically or 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:

  • make or keep records of the amount of vacation pay paid during a vacation entitlement year or stub period, or the amount of wages on which that vacation pay was based; or
  • provide a statement setting out vacation pay and vacation time information contained in the employer’s records, as discussed above.

Reminder: In this situation, the employer needs to:

  • report the vacation pay that is being paid separately from the amount of other wages on the regular wage statement; or
  • provide a separate statement setting out the vacation pay that is being paid.

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.

Vacation Pay Checklist

Employers, please verify that:

  • Employees receive a minimum of two or three weeks of vacation time per entitlement year, plus any applicable stub period vacation time.
  • Employees receive vacation pay in the amount of at least four or six per cent of all gross wages (less vacation pay and severance pay paid) earned during the 12-month entitlement period and/or stub period (if applicable).
  • Active and inactive employment is included when calculating the vacation entitlement year and stub period.
  • The minimum two or three weeks of vacation time earned during an entitlement year is given to the employee within 10 months of the end of the entitlement year.
  • Vacation time earned during a stub period is given to the employee within 10 months of the end of the stub period.
  • The vacation is taken in full weeks unless shorter periods of vacation time are requested electronically or in writing by the employee and agreed to electronically or in writing by the employer.
  • Vacation pay is paid:
    • In a lump sum before the vacation begins or if taking the vacation in less than complete weeks, on or before the pay day for which the vacation falls.
    • On each pay day, if agreed to electronically or in writing by the employee.
    • On or before the pay day for which the vacation falls (if paying by direct deposit).
    • At some other time agreed to electronically or in writing by the employee.
  • When paying vacation pay, the employee receives a wage statement setting out vacation pay separately or receives a separate wage statement with that information.
  • Any unpaid vacation pay is paid to the employee within seven days of their employment ending, or on the date that would have been the employee’s next regular pay day, whichever is later.
  • Records of vacation time and vacation pay are made within seven days of the end of the employee’s vacation entitlement year.
  • Records of vacation time and vacation pay are kept for five years after they are made.

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Questions? Call the Employment Standards Call Centre at 1-800-531-5551

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