Employment standards rules – Vacations and vacation pay

Basic rules

• Employers must provide an annual vacation to most employees based on length of service to make sure they can rest from work without loss of income.
• Employers must give vacation time, and employees must take the vacation to which they’re entitled.
• Employees must work for one year before they’re entitled to vacation time
• Employees are entitled to these minimum paid vacations:
  • 2 weeks with pay after each of the first 4 years of employment
  • 3 weeks with pay after 5 consecutive years of employment

Employee eligibility

Basic eligibility

Most employees are entitled to vacation time and vacation pay after being employed for one year.

However, upon employee request and employer’s acceptance, an employee can take vacation with pay before completing a full 12 months of employment.

Exemptions from the minimum standards for vacations and vacation pay

Some employees who work in specified industries and professions aren’t eligible for annual vacations and vacation pay, including:

• licensed or registered salespersons of real estate and securities
• commission salespersons who solicit orders principally outside the place of business of their employer; route salespersons are not exempt
• extras in a film or video production
• licensed insurance salespersons who are paid entirely by commission income
• teachers

Vacation time

Employee entitlements

Employers must give vacation time and employees must take the vacation to which they’re entitled. Where employees have already been paid vacation pay, their time off will be without additional pay.

How vacation time is calculated

The minimum vacation time an employee is entitled to during 12-month periods is as follows:

Job-protected leaves and vacations

Time spent on job-protected leave counts towards length of employment and is used to determine number of weeks for annual vacation.

Timing of vacations

Employees must take their vacation time sometime in the 12 months after they earn it.

Length of vacations

An employer is required to provide annual vacations to employees.  Employers are to provide vacations in one unbroken period, however, an employee can request, in writing, for the vacation to be broken into shorter periods and if the request can be accommodated, the employer should provide this.

Vacation time is allowed to be taken in half-day increments if agreed to by the employer and employee.

Disagreements about vacation dates

Employers are allowed to deny requests for vacation at specific times due to operational reasons.  If the employer and employee can’t agree on the employee’s vacation time, the employer can decide when it will be taken. However, the employer must give the employee at least 2 weeks’ notice in writing of the vacation start date.

When a general holiday falls during a vacation

If qualified for the general holiday, the employee can take off either the first scheduled working day after their vacation; or, in agreement with the employer, they can take another day that would otherwise have been a work day, before their next annual vacation.

Vacation pay

Employee entitlements

Vacation pay is based on an employee’s wages paid for work.

The calculation of vacation pay should also include the previous year's vacation pay. However, if an employer pays vacation pay frequently, such as on every pay period or on a quarterly basis, they do not have to calculate vacation pay on the previously paid vacation pay.

For the purpose of calculating vacation pay, the definition of wages doesn’t include:

• overtime pay
• general holiday pay
• termination pay
• an unearned bonus
• tips and gratuities, or
• expenses and allowances

How vacation pay is calculated

For employees paid monthly

For employees paid by monthly salary, the employer must pay the employee’s regular rate of pay for the time of their vacation.

Each week of vacation pay is calculated by dividing their monthly wage by 4.3333 (which is the average number of weeks in a month).

For employees paid other than monthly

For employees who are paid hourly, weekly, or by commission or other incentive pay, the employer must pay:

Change of benefits

Increasing vacation pay

If the employer agrees to provide vacation pay greater than required by the Code, Employment Standards can enforce this.

Reducing vacation pay

If the employer intends to reduce an employee's vacation pay, they must notify the employee before the start of the pay period in which the reduction takes effect. However, the rate must always be at least the minimum required by the legislated standards. This can only be applied on future vacation pay to be accrued and can’t be applied retroactively on vacation pay earned, but not yet paid to the employee.

An employee’s annual vacation period can also be reduced if that employee is absent from work. The reduction in vacation period may be made in proportion to the number of days the employee was or would normally have been scheduled to work, but did not.

When vacation pay is paid out

When an employer pays an employee vacation pay each pay period, they must pay it:

• at least once a month,
• on each pay period, or
• at least one day before the employee’s vacation if vacation pay has not previously been paid out, and the employee requests it, and
• no later than the next regular pay day after the vacation begins

An employer must provide an employee with a statement of earnings that includes vacation pay at the end of each pay period.

See Payment of earnings for more information.

Anniversary date

Employers can establish a common anniversary date for employees, for vacation purposes. However, an employee must not lose any entitlement to vacation time or pay as a result of the introduction of a common anniversary date.

Change of ownership

When a business changes ownership, it doesn’t affect an employee’s vacation benefit entitlement. The previous owner must pay all vacation pay accumulated up to the date of transfer of ownership, and the new owner must grant any vacation time accumulated.

Vacation pay owed at termination

Before 12 months of employment

If employment terminates before an employee completes 12 months of employment, the employer must pay 4% of the employee’s wages earned during employment.

After 12 months of employment

If employment terminates after an employee becomes entitled to annual vacation, the employer must pay the unpaid vacation entitlements for the previous year, plus:

• for an employee who’s entitled to 2 weeks’ vacation:
  • at least 4% of the employee’s wages for the period from the date they last became entitled to an annual vacation to employment termination date
• for an employee who is entitled to 3 weeks’ vacation:
  • at least 6% of the employee’s wages for the period from the date they last became entitled to an annual vacation to employment termination date

Timing of payout

• Employers are prohibited from requiring employees to use vacation entitlements during the termination notice period, unless agreed to by both parties.
• When employment is terminated, employees must be paid their vacation pay as follows:
  • within 10 consecutive days after the end of the pay period in which termination occurred, or
  • 31 consecutive days after the last day of employment.
• The employer may choose whichever option best suits their needs.

See Termination and lay-off for more information.

How the law applies

Part 2, Division 6 of the Employment Standards Code sets the general rules for vacations and vacation pay.

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