Vacation time and vacation pay are important employment standards in Ontario. Employees may be entitled to paid vacation even when their employer does not provide a separate vacation benefit beyond the minimum required by law.
Ontario’s Employment Standards Act, 2000 (ESA) establishes minimum requirements for vacation time and vacation pay for employees covered by the legislation. The amount of vacation time and vacation pay generally depends on how long the employee has been employed, although some jobs are subject to special rules or exemptions. An employment contract or collective agreement may provide greater vacation benefits than the statutory minimum.
Understanding the difference between vacation time and vacation pay can help employees determine whether they are receiving the vacation benefits they are entitled to.
What Is Vacation Time
Vacation time is the time away from work that an employee is entitled to take as vacation.
Under Ontario’s ESA, employees with less than five years of employment are generally entitled to at least two weeks of vacation time after each 12-month vacation entitlement year. Employees with five or more years of employment are generally entitled to at least three weeks of vacation time after each 12-month vacation entitlement year.
An employment contract can provide more vacation time than the ESA minimum. Employees should therefore review both their employment agreement and the applicable employment standards.
What Is Vacation Pay
Vacation pay is money an employee earns for vacation.
For employees with less than five years of employment, the ESA generally requires vacation pay of at least four per cent of wages earned during the applicable vacation entitlement year or stub period. Employees with five or more years of employment are generally entitled to at least six per cent.
Vacation pay and vacation time are related but separate entitlements. An employee can be entitled to a certain amount of vacation time while also receiving vacation pay calculated according to their wages.
How Much Vacation Time Do You Get in Ontario
For most employees covered by the ESA, the minimum vacation entitlement is based on length of employment.
Employees with less than five years of employment generally receive at least two weeks of vacation time after completing each 12-month vacation entitlement year.
Employees with five or more years of employment generally receive at least three weeks of vacation time after completing each 12-month vacation entitlement year.
Some employees may have greater contractual vacation benefits, while others may be subject to special ESA rules or exemptions.
How Much Vacation Pay Do You Get in Ontario
The minimum vacation pay under the ESA generally depends on an employee’s length of employment.
Employees with less than five years of employment are generally entitled to at least four per cent of the wages they earned during the applicable vacation entitlement year or stub period.
Employees with five or more years of employment are generally entitled to at least six per cent of the wages they earned during the applicable vacation entitlement year or stub period.
The calculation can become more complicated when an employee receives bonuses, commissions, other forms of compensation or takes a leave of absence.
What Is a Vacation Entitlement Year
A vacation entitlement year is generally a recurring 12-month period beginning on the employee’s date of hire.
An employer can establish an alternative vacation entitlement year that begins on a different date. When this happens, an employee may be entitled to a proportionate amount of vacation time for the period between the employee’s start date and the beginning of the employer’s alternative vacation year. This period is commonly referred to as a stub period.
Employees should understand which vacation year their employer uses because it affects when vacation time and vacation pay are calculated.
When Can You Take Your Vacation
Employees generally have a right to take the vacation time they have earned under the ESA.
The employer generally determines when vacation is taken, subject to the employee’s statutory entitlement and any applicable employment agreement or workplace policy. Vacation must generally be taken within the required period following the vacation entitlement year.
Employees and employers can also agree to different arrangements where permitted by the ESA.
Can an Employer Refuse Your Vacation
An employer may have some ability to determine when vacation is scheduled, particularly where the workplace has operational requirements.
However, an employer generally cannot simply eliminate an employee’s statutory vacation entitlement. The ESA establishes minimum requirements concerning when vacation must be provided.
Employees who are repeatedly unable to take their statutory vacation should review their employer’s vacation policy and consider asking how the unused entitlement will be addressed.
Can You Take Vacation in Separate Days
Vacation does not always have to be taken as one continuous block.
The ESA contains rules concerning how vacation time can be divided. Where the employee’s vacation entitlement is more than five days, the legislation generally requires at least five vacation days to be taken consecutively, with the remaining days able to be taken separately. An employee can also request in writing to take vacation in shorter periods if the employer agrees.
An employment agreement or workplace policy may provide additional flexibility.
Can Your Employer Make You Take Vacation
An employer can generally schedule an employee’s statutory vacation within the periods permitted by the ESA.
Employees should therefore understand that vacation is not necessarily something they can choose to postpone indefinitely. Ontario’s employment standards rules establish requirements concerning when vacation must be taken.
If an employer tells an employee to use vacation at a particular time, the employee should check the workplace policy and employment agreement as well as the statutory requirements.
Can Vacation Pay Be Paid on Every Paycheque
Vacation pay does not necessarily have to be paid at the same time as an employee takes vacation.
Ontario permits an employer to pay vacation pay on every paycheque if the employee agrees. Since June 21, 2024, the ESA has clarified that this arrangement requires the employee’s agreement, which must be in writing, including electronically.
Employees should therefore check their pay statements to determine whether vacation pay is being accumulated for later payment or is already being included with their regular wages.
When Should Vacation Pay Be Paid
The timing of vacation pay can depend on the arrangement between the employer and employee.
Generally, vacation pay must be paid before the employee takes the vacation or on or before the payday for the pay period in which the vacation occurs, depending on the circumstances and the applicable payment arrangement.
An employee may also agree in writing to receive vacation pay on each paycheque or at another agreed time, as permitted by the ESA.
Employees should review their pay statements and employment agreement if they are uncertain about when vacation pay is supposed to be paid.
What Happens to Vacation Pay During a Leave
An employee taking certain ESA-protected leaves does not automatically lose their vacation entitlement.
Ontario’s ESA provides employees on specified leaves with the right to defer their vacation until the leave ends, subject to the rules governing vacation and the particular leave. This can include pregnancy, parental, sick, family responsibility, bereavement, family medical and other protected leaves.
Vacation pay can also continue to be earned based on wages actually earned during the applicable period. The exact calculation can depend on the circumstances.
Does Vacation Pay Accumulate While You Are on Leave
Vacation pay is generally calculated based on wages earned during the applicable vacation entitlement year or stub period.
An employee who earns no wages during a period of leave may therefore not accumulate additional vacation pay based on wages that were not earned during that period. However, protected leave can affect the employee’s vacation time entitlement and when vacation can be taken.
Employees should review the particular type of leave and their employment agreement when determining their rights.
What Happens to Vacation When You Leave Your Job
When employment ends, an employee may be entitled to unpaid vacation pay that has been earned but not yet paid.
Vacation pay is an employment standard separate from termination pay and statutory severance pay. An employee who leaves a job can potentially be entitled to more than one of these amounts depending on the circumstances.
Employees should review their final pay and any termination or resignation documentation to determine whether outstanding vacation pay has been included.
Can You Lose Unused Vacation
Employees generally cannot simply lose statutory vacation time or vacation pay because they did not use it when an employer was required to provide it.
Ontario’s ESA establishes rules concerning when vacation must be taken and how vacation pay is earned and paid. Employers are also required to maintain records concerning vacation time and vacation pay.
If an employee believes vacation time or pay has been improperly withheld, they may wish to raise the issue with the employer and consider obtaining legal advice or information about the employment standards complaint process.
Does Vacation Pay Count as Wages
Vacation pay is treated as a form of employment compensation under Ontario’s employment standards rules.
However, the ESA contains specific rules about which amounts are included or excluded when calculating vacation pay. The calculation can therefore be more complicated than simply applying a percentage to every payment an employee receives.
Employees whose compensation includes bonuses, commissions or other variable amounts may want to review how those payments are treated.
How Are Bonuses Treated for Vacation Pay
Whether a particular bonus forms part of the wages used to calculate vacation pay can depend on the nature of the bonus and the ESA rules that apply.
Not every payment an employee receives is necessarily included in the vacation pay calculation. Some types of payments may be excluded from the statutory calculation.
Employees with significant bonus compensation should therefore avoid assuming that four or six per cent of their base salary necessarily represents their entire vacation pay entitlement.
Does Vacation Pay Apply to Commissions
Employees who receive commissions may have vacation pay calculated differently from employees who receive only a fixed salary.
The ESA contains specific rules concerning wages and the treatment of different forms of compensation. The employee’s compensation structure and applicable employment agreement can therefore affect the calculation.
Employees who believe their vacation pay has been calculated incorrectly should review their pay records and the terms governing their compensation.
What Happens to Vacation Pay When You Are Terminated
Vacation pay that has been earned but not paid generally remains an amount owed to the employee when employment ends.
Termination pay and vacation pay are separate concepts. An employee may be entitled to termination pay under the ESA while also being owed outstanding vacation pay.
Depending on the circumstances, vacation pay may also be payable on termination pay because termination pay can itself generate vacation pay under Ontario’s employment standards rules.
Employees should review their final pay carefully after termination.
Can an Employer Give You Vacation Pay Instead of Vacation Time
Vacation pay and vacation time are separate ESA entitlements.
An employer generally cannot simply pay an employee vacation pay and eliminate the employee’s statutory vacation time. The purpose of the vacation provisions is to provide both vacation time and vacation pay to employees covered by the legislation.
There can be exceptions and special rules depending on the employee’s circumstances, so employees should consider the specific arrangement before assuming that a payment replaces their vacation entitlement.
What If Your Employment Contract Provides More Vacation
An employment contract can provide greater vacation benefits than the minimum required under the ESA.
For example, an employer may provide three or four weeks of vacation to an employee who has worked for the company for less than five years, even though the statutory minimum is generally two weeks.
The contractual entitlement may therefore be greater than the ESA minimum. Employees should review the written employment agreement and workplace policies when determining their total vacation entitlement.
What If Your Employer Says You Have No Vacation Entitlement
Some jobs are exempt from certain vacation provisions of the ESA or are subject to special rules.
However, an employer cannot simply avoid the ESA vacation requirements by placing an incorrect label on an employee or employment relationship. The employee’s actual circumstances can matter when determining whether the ESA applies.
Employees who are told they have no vacation entitlement should consider checking whether their position is actually exempt and whether their employment agreement provides contractual vacation benefits.
What Should You Do If You Are Not Receiving Vacation Pay
Employees who believe they are not receiving the vacation pay they are entitled to should begin by reviewing their employment agreement and pay statements.
It can also be useful to calculate the vacation pay received against the wages earned during the relevant vacation entitlement year. Employees should keep copies of pay statements and other records that may help establish what they earned and what was paid.
If the issue cannot be resolved with the employer, an employee may consider obtaining legal advice or learning about the process for making an employment standards claim.
How Long Should You Keep Vacation Records
Employees should keep their own records of vacation taken and vacation pay received.
Ontario requires employers to maintain records concerning vacation time and vacation pay. Vacation records generally have to be maintained for five years after the applicable record was made.
Keeping personal records can nevertheless be useful if there is later a disagreement about vacation entitlement or payment.
Frequently Asked Questions About Vacation Pay and Vacation Time
How many weeks of vacation do you get in Ontario?
Employees with less than five years of employment generally receive at least two weeks of vacation time after each 12-month vacation entitlement year. Employees with five or more years generally receive at least three weeks.
An employment contract can provide more vacation than these statutory minimums.
How much is vacation pay in Ontario?
Employees with less than five years of employment are generally entitled to at least four per cent of eligible wages earned during the applicable period. Employees with five or more years are generally entitled to at least six per cent.
Can my employer pay vacation pay on every paycheque?
Yes, but an employer must have the employee’s agreement to pay vacation pay on every paycheque. Since June 21, 2024, the agreement must be in writing, including electronically.
Can I take my vacation whenever I want?
Not necessarily. Employers generally have a role in scheduling vacation, subject to the employee’s statutory entitlement and any applicable employment agreement or workplace policy.
Can my employer force me to take vacation?
An employer can generally schedule statutory vacation within the periods permitted by the ESA. Employees should review the applicable workplace policy and employment agreement if there is a disagreement about scheduling.
Do I get vacation pay when I quit?
Generally, vacation pay that has been earned but not paid remains payable when employment ends.
Do I get vacation pay when I am fired?
Generally, any vacation pay that has been earned but not paid remains payable after termination. An employee may also have separate rights to termination pay or severance pay depending on the circumstances.
Can unused vacation be carried over?
Vacation must generally be taken within the periods established by the ESA. There can be circumstances where vacation is deferred or carried over, including certain protected leaves or arrangements permitted by the legislation.
Is vacation pay included in my salary?
It depends on the employment agreement and how the employer pays vacation pay. Some employees receive vacation pay separately when vacation is taken, while others may have an arrangement where vacation pay is paid on each paycheque.
Employees should check their pay statements to determine how their vacation pay is being provided.
Can my employer deny vacation because the company is busy?
Employers generally have some ability to schedule vacation based on workplace requirements, but they must still comply with the employee’s statutory vacation entitlement.
An employer cannot simply eliminate the employee’s minimum vacation rights because the workplace is busy.
Should I speak with an employment lawyer about unpaid vacation pay?
Legal advice may be useful when an employer refuses to pay vacation amounts, disputes the employee’s entitlement, miscalculates vacation pay or provides an employment contract that creates uncertainty about the employee’s rights.
Employees with a significant unpaid vacation balance may also want to understand whether other employment standards or contractual claims are involved.
Get Advice About Vacation Pay and Vacation Time
Vacation rights can be more complicated than simply counting the number of days an employee takes off. The employee’s length of employment, wages, compensation structure, employment contract, vacation entitlement year and applicable ESA rules can all affect the amount of vacation time and vacation pay available.
EmploymentLawyerToronto.ca provides employment law information and legal services for employees dealing with workplace issues in Ontario. If you believe you have not received the vacation time or vacation pay you are entitled to, consider speaking with an employment lawyer about your circumstances.
This page provides general information about Ontario employment law and is not legal advice. Employment law can depend on the specific facts of each situation.