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Vacation
Ministry of Labour - MOL
Last Verified:
2006-10-16
Act:
Employment Standards Act
Regulation:
Vacation and Vacation Pay
To Whom Does This Apply?
This document is based on information from the Ministry of Labour's Web site at http://www.labour.gov.on.ca/english/es/factsheets/fs_vacation.html (last updated July, 2006).
This Fact Sheet is provided for your information and convenience only. It is not a legal document. For further details, consult Employment Standards Act Publications . For complete information, refer to the Employment Standards Act, 2000 and its regulations.
Before you read this document, please read the Ministry's General Information Fact Sheet and find out if the ESA applies to you.
Who is entitled to a vacation with pay?
Most employees covered by the ESA are eligible for an annual vacation with pay after 12 months of employment. Full-time, part-time, temporary, seasonal, contract workers and student workers are eligible. However, there are job-specific exemptions to the vacation with pay part of the ESA that mean certain workers are not eligible. The minimum vacation time under the ESA is two weeks a year. This is known as a "vacation entitlement year". There are two kinds of vacation entitlement years:
- The "standard vacation entitlement year" is a recurring 12-month period that starts on the day the employee is hired.
- An "alternative vacation entitlement year" can be set up by an employer to begin on a date chosen by the employer other than the employee's date of hire. This is also a recurring 12-month period.
If the employer uses an alternative vacation entitlement year, the employee is also entitled to a pro-rated amount of vacation with pay for the period ("stub period") before the 12-month vacation entitlement year begins.
To obtain details about job-specific exemptions to the vacation with pay rules, please refer to the chart in the "How are You Covered by the ESA?" Fact Sheet at the following address: http://www.labour.gov.on.ca/english/es/factsheets/fs_covered.html.
For further information:
visit these Web sites:
The Employment Standards Act Publications
http://www.labour.gov.on.ca/english/es/es_pubs.html
Summary
What is vacation with pay?
This employment standard has two parts: vacation time and vacation pay. Employees earn two weeks of vacation time after each 12 months of employment. Vacation pay is calculated as four per cent of the "gross" wages earned in that 12-month period.
Note: 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.
Understanding how vacation is earned: key definitions
Vacation entitlement year
Most employees covered by the ESA earn two weeks of vacation with pay after each 12 months of employment. This 12-month period is called the "vacation entitlement year".
Standard vacation entitlement year
This starts the day an employee is hired and lasts 12 months. After this year ends a new 12-month period begins. This happens every 12 months as long as the employee works for the employer.
Alternative vacation entitlement year
An employer might have an entitlement year that doesn't start on the date an employee is hired. For example, an employee might be hired on February 1, but the employer has set up the entitlement year to begin each year on April 1.
Stub period
This is the period between the date of hire and the beginning of the first alternative vacation entitlement year, or the period between the end of the last standard vacation entitlement year and the start of the first alternative vacation entitlement year. Employees earn a pro-rated amount of vacation time during a stub period.
What if an employee is away from work during the year?
The 12 months of employment that qualify an employee for annual vacation time include active employment and inactive employment. For example, the right to vacation time is earned even when an employee spends time away from work because of:
- layoff;
- sickness or injury;
- approved leaves under a contract of employment or collective agreement; or
- pregnancy, parental and emergency leaves.
What if an employee does not work for the employer for a full year?
This means the employee doesn't qualify for vacation time. However, employees earn vacation pay for every hour worked. So even if an employee works one hour, he or she is entitled to four per cent of the hour's wages as vacation pay.
Employees may also have contracts or collective agreements that provide better vacation benefits than the minimum required, and so they may be eligible for vacation time even though they haven't worked with an employer for 12 months.
See What if employment ends before an employee has taken vacation? for more details on employee vacation pay entitlements.
Employee Entitlements: Vacation Time
How much vacation time are employees entitled to?
The minimum vacation time under the ESA is two weeks after every 12 months of employment.
Who decides when an employee may take his or her vacation with pay?
The employer decides when vacation time will be taken, provided that the employee receives his or her vacation time and pay no later than 10 months after earning it.
If the deadline under the ESA for taking a vacation comes up when an employee is on pregnancy, parental or emergency leave, the vacation must be taken when the leave ends or at a later date on the written agreement of the employer and employee. Also, if an employee who is on a pregnancy, parental or emergency leave would otherwise have to give up some or all of his or her vacation under his or her contract of employment, the employee may postpone taking the vacation until the leave expires or take it at a later date on the agreement (in writing) of the employer and employee.
Vacation pay must be paid either before the vacation commences, or if the employee is paid by direct deposit or is not taking vacation in complete weeks, on or before the pay day for the period in which the vacation falls (unless the employee agrees in writing to payment at some other time).
An employee can give up his or her vacation time with the employer's written agreement and the approval of the Director of Employment Standards. This approval wouldn't affect an employer's obligation to pay the employee vacation pay: employees may give up vacation time, but not the right to vacation pay.
How much vacation time may an employee take at once?
Vacation Time Earned During Vacation Entitlement Years
Employers are required to schedule vacation time earned in the 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.
Vacation Time Earned During Stub Periods
If the amount of vacation time earned during the stub period is between two and five days, the vacation days must be taken in a row, unless the employee requests in writing and the employer agrees in writing to shorter periods.
If the amount of vacation time earned during the stub period is more than five days, the first five days must be taken in a row and any additional days may be taken together with the first five or in a separate period of days in a row. However, the employee may request in writing and the employer may then agree in writing to shorter periods.
What if an employee wants to take his or her vacation in periods of less than a week?
The employee must ask the employer in writing, and the employer must agree in writing, for vacation time to be taken in periods of less than one week.
In this case, the number of vacation days the employee is entitled to is determined one of two ways:
- the employer calculates the number of days in an employee's usual work week and multiplies by two; or
- if the employee doesn't have a usual work week, the employer calculates the average number of days the employee worked each week in the four months before the first day of vacation is taken. The number is then multiplied by two.
Employee Entitlements: Vacation Pay
What pay are employees entitled to when on vacation?
Employees must receive a minimum of four per cent of the "gross" wages (excluding vacation pay) they earned in the 12 months for which the vacation is being given (see Gross wages: what's included and what's not?).
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 to three weeks' vacation, with six per cent of gross earnings for vacation pay.
What if employment ends before an employee has taken vacation?
An employee might quit or have his or her employment terminated before receiving all of the vacation pay earned. In this case, the employer must first calculate the vacation pay owing to the employee (four per cent of gross wages for the time the person was employed in the year, see Gross wages: what's included and what's not?). Then the employer must pay this amount no later than the later of seven days after employment ended, or on what would have been the employee's next pay day.
Employees earn vacation pay for every hour worked. So even if an employee works one hour, he or she is entitled to four per cent of the hour's wages as vacation pay.
What if an employee chooses not to take vacation?
If the employee and employer agree in writing that the employee will forgo his or her vacation and the Director of Employment Standards approves the agreement, the employer is still obligated to pay the employee any vacation pay earned with respect to that vacation.
Gross wages: what's included and what's not?
Gross wages include:
- regular earned wages, as well as commissions;
- work related bonuses and gifts;
- overtime pay;
- public holiday pay;
- allowances for room and board;
- termination pay.
They do not include:
- vacation pay;
- tips and gratuities;
- discretionary bonuses and gifts that are not related to hours of work, production or efficiency (such as a Christmas bonus unrelated to performance);
- expenses and travelling allowances;
- living allowances;
- contributions made by an employer to a benefit plan and payments from a benefit plan that an employee is entitled to;
- severance pay.
Note: Although vacation pay is defined as "wages" under the Act, vacation pay that has been paid out or has been earned but not paid is not included in the amount of "gross wages" on which vacation pay is calculated. Although severance pay is defined as "wages" under the ESA, severance pay is not included in the amount of "gross wages" for calculating vacation pay.
When should an employee receive his or her vacation pay?
An employee must receive his or her vacation pay in a lump sum before taking a vacation. There are four exceptions:
- 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 pay day for the period in which the vacation falls.
- When the employee has agreed in writing that his or her vacation pay will be paid on each paycheque as it accumulates. In this case, the employee's wage statement must clearly show the amount of the vacation pay, separate from any other amounts paid. Or, the employer may issue a separate statement for the employee's vacation pay.
- If the employee agrees in writing, the employer can pay the vacation pay at any time agreed to by the employee.
- If the employer pays the employee his or her wages by direct deposit into an employee's account at a financial institution.
The employee must be paid vacation pay on or before the pay day for the period in which the vacation falls.
What records must the employer keep?
Employers must keep records of vacation time earned since the date of hire but not before the beginning of the "vacation entitlement year, the vacation time that has been earned and taken, and the balance of remaining vacation time at the end of the "vacation entitlement year". Employers must also keep records of vacation pay during the year and how that pay was calculated. Those records must be made no later than seven days after the end of the vacation entitlement year or the first pay day after the year ends, whichever is later. If an employee asks for information concerning the current vacation entitlement year, the employer is required to provide the information no later than:
- seven days after the end of the vacation entitlement year, or
- the first pay day after the vacation entitlement year ends.
If the employee has agreed that vacation pay will be paid on each paycheque 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 indicating the vacation pay that is being paid. The employer must also keep records of that information.
Must employers provide vacation pay when there's a labour dispute?
If an employee has scheduled vacation time, then goes on strike or is locked out during that time, the employer must still provide vacation pay for the scheduled vacation time.
Do public holidays affect vacations and vacation pay?
A public holiday could fall during an employee's vacation. If the employee qualifies for a public holiday, he or she doesn't lose the right to the paid public holiday, and the day remains a vacation day for the employee.
In this case, the employee is entitled to one of the following:
- a substitute day off work with public holiday pay, taken within three months of the public holiday or, if the employee agrees in writing, within 12 months of the public holiday
or
- if the employee agrees in writing, the employer can pay public holiday pay for the public holiday without giving the employee a substitute day off work
For further information:
please call (416) 326-7160 or 1-800-531-5551
visit the Web site:
Public Holidays
http://www.labour.gov.on.ca/english/es/factsheets/fs_public.html
see the document
Public Holidays
What if the employer does not follow the ESA?
If an employee thinks the employer is not complying with the ESA, he or she can call the Employment Standards Information Centre at 416-326-7160 or toll free at 1-800-531-5551 for more information about the ESA and how to file a complaint. Complaints are investigated by an employment standards officer who can, if necessary, make orders against an employer—including an order to comply with the ESA. The ministry has a number of other options to enforce the ESA, including requesting voluntary compliance, issuing an order to pay wages, an order to reinstate and/or compensate, a notice of contravention, or issuing a ticket or otherwise prosecuting the employer under the Provincial Offences Act.
Related Reading
DISCLAIMER
Information contained in this section is of a general nature only and is not intended to constitute advice for any specific fact situation. For particular questions, the users are invited to contact their lawyer. For additional information, see contact(s) listed below.
Ontario Contact(s):
Employment Standards Information Centre
Ministry of Labour - MOL
Ontario
Telephone: (416) 326-7160
Fax: (416) 314-8725
Toll-free (information): 1-800-531-5551
E-mail: webes@mol.gov.on.ca
Web site:
http://www.gov.on.ca/LAB
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