As many employees take time off from work to enjoy the summer
months, employers often have questions regarding the calculation of
employees' vacation pay and the scheduling of their vacation
To assist provincially-regulated employers in Ontario, we have
compiled a list of the ten statutory vacation requirements
employers must meet to comply with Ontario's Employment
Standards Act, 2000 (the "ESA").
The obligation to provide
vacation arises upon completion of each "vacation entitlement
year". An employee becomes entitled to vacation after
each 12-month vacation entitlement year, which usually begins on
the employee's hire date. Where the employer establishes an
alternative vacation entitlement year, the employee is entitled to
a pro-rated period of vacation for the stub period from hire date
until the start of the alternative vacation entitlement year.
Vacation pay must equal at
least 4% of wages. Employees are entitled to a minimum of
4% of the wages they earned during the vacation entitlement year as
vacation pay. "Wages" includes the employee's regular
earnings (including commissions), bonuses or gifts that are not
discretionary or which are related to hours work, overtime pay,
public holiday pay and termination pay.
Vacation pay must be paid as
a lump sum before the vacation time. Generally, vacation
pay must be paid to an employee in a lump sum before they take the
vacation time earned unless one of the following exceptions
The vacation time being taken is less
than one week.
The employee has agreed in writing
that vacation pay will be paid on each pay cheque as it
The employee has agreed in writing to
an alternate time for payment.
The employee is paid wages by direct
Employees are entitled to 2
weeks of vacation time. Employees are entitled to a
minimum of two weeks of vacation time per year upon completion of
12 months of consecutive employment.
Employees must take vacation
in 1 or 2 week blocks. The ESA requires employers
to schedule vacation in 1 or 2 week blocks. An exception to this
requirement is available when the employee makes a written request
and the employer agrees in writing for the vacation to be scheduled
for shorter periods of time. Employers are not required to agree to
Employers may schedule
vacation time. Employers may schedule vacation time. The
vacation time does not have to be requested by the employee.
Vacation must be taken within
10 months of the vacation entitlement year. Employers must
schedule the statutory vacation time earned to be taken within 10
months of the completion of the vacation entitlement year. Be
careful of this carry-over period when contemplating "use it
or lose it" policies.
Vacation must not be
scheduled during a period of statutory notice of
termination. An employer must not schedule vacation time
during an employee's statutory notice period. An exception is
available when, after having received the employer's written
notice of the termination of her employment, the employee agrees to
take vacation time during the statutory notice period.
Employees on vacation are
entitled to public holiday pay. When a public holiday
falls within an employee's vacation time, the employee must
receive either (a) a substitute day off work with public holiday
pay within 3 months of the public holiday, or with the
employee's written agreement, within 12 months of the holiday,
or (b) with the employee's written agreement, public holiday
pay without a substitute day off work. In order to qualify for
public holiday pay, the employee on vacation must work all of their
last regularly scheduled day of work before the public holiday and
all of their first regularly scheduled day of work after the public
Employees on leaves of
absence accumulate entitlement to vacation. In general,
the period of time that an employee is away from work because they
are taking a leave of absence must be counted towards the
employee's completion of a vacation entitlement year or stub
When an employer has a vacation policy or has agreed to
vacation-related terms in an employment contract that provide a
greater benefit to employees than these minimum statutory
requirements, the employer should ensure that it complies with the
applicable policy or agreement. A unionized employer must ensure
their vacation practices comply with any applicable collective
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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