A Few Things You Probably Didn’t Realize About Vacation Pay if You’re an Employer in Ontario

As an Employee, You’re Entitled to Three Weeks of Vacation Pay if You Have Worked With the Employer for Five Years.

In Ontario, there are minimum employment standards around vacation leave that gives rights to employees for time off with pay. While there are some job classifications that are excused, most employers must abide by the Employment Standards Act (ESA) when it comes to providing vacation with pay.

As of January 1, 2018, vacation time and pay splits employees into two groups based on the number of years an employee has worked with the same employer. Take a look at the difference in the minimum vacation time and pay:

Minimum Standard Less than 5 years  5 years or more 
Vacation Time Two weeks of
vacation time after
each 12-month
vacation entitlement year
Three weeks of
vacation time
Vacation Pay Four percent of the
gross wages (excluding
any vacation pay) earned
in the 12-month
vacation entitlement
year or stub period
(if any)
Six percent of the
gross wages earned
in the 12-month
vacation entitlement
year or stub period
(if any)

As an employer, you have the right to decide if you’d like to provide greater rights and privileges to your employees than what is required by the ESA. However, you absolutely cannot give or pay less than the terms and conditions listed above. If you do, you could be susceptible to receiving an ESA claim against you.

7 Things to Know About Vacation Pay in Ontario

Vacation pay is often a commonly asked topic that HR consultants get questions about. Here are seven things to know, in addition to the minimum standards for vacation leave:

  1. A vacation entitlement year is a recurring 12-month period; it can be tallied starting from the employee’s hire date or alternatively, around the calendar year. If it’s the latter, you must provide a pro-rated amount of vacation time for the period between the start dates of your employee and your calendar year; this is called a “stub period”.
  2. If an employees does not complete a full vacation entitlement year or stub period, employers don’t have to provide vacation time. However, employees do earn vacation pay as they earn salary or wages.
  3. Your employees must take vacation within ten months after finishing a vacation entitlement year or stub period.
  4. Employers must schedule vacation time in blocks: two or three-week blocks, or in one-week blocks of two or three. For shorter episodes of time off (i.e. one day), your employee may request to do so and the agreement can be made in writing.
  5. For most cases, earned vacation pay must be given in a lump sum before your employee takes the time off. However, there are several exceptions to this.
  6. In cases of termination, you are obliged to pay your employee their earned vacation that has not yet been paid. This is required within seven days of the employee exiting the workspace.
  7. If your employee asks for a statement of their vacation pay which is expected in writing, you must provide these records within seven days of the request.

For vacation periods, it’s important to follow the standards set out by the ESA and ensure that you are abiding by them. It’s also important to note that most employees identify vacation policies as a key part of their total package.

David Jackson

David is a personal finance expert, a professional male model, and an entertainment writer.