Vacation time and vacation pay are related but separate rights under Ontario’s Employment Standards Act (ESA). One determines time away from work; the other determines the money attached to that entitlement.
Ontario minimum vacation entitlements
| Period of employment | Minimum vacation time | Minimum vacation pay |
|---|---|---|
| Less than 5 years | 2 weeks after each completed vacation entitlement year | 4% of gross wages |
| 5 years or more | 3 weeks after each completed vacation entitlement year | 6% of gross wages |
An employment contract or workplace policy can provide more than these minimums.
What counts as gross wages?
Vacation pay is generally calculated on wages earned during the vacation entitlement year or stub period. This can include regular wages, commissions, overtime pay, public holiday pay and certain bonuses. It generally does not include vacation pay itself and some termination-related amounts. The exact ESA definition matters when compensation is complex.
Calculation examples
Employee with under five years
If eligible gross wages are $48,000, minimum vacation pay is:
$48,000 × 4% = $1,920
Employee with at least five years
If eligible gross wages are $55,000, minimum vacation pay is:
$55,000 × 6% = $3,300
When is vacation pay paid?
It is usually paid in a lump sum before vacation begins. However, it may be paid on each paycheque when the employee agrees electronically or in writing, or when the employer pays wages by direct deposit and follows the ESA timing rule. Check pay stubs to ensure the vacation amount is clearly recorded.
Can an employer choose the vacation dates?
Employers generally have the right to schedule vacation, subject to ESA timing and block requirements. Vacation normally must be taken within ten months after the entitlement year ends. With written or electronic agreement, it may be taken in shorter periods.
What happens when employment ends?
An employee must receive any outstanding vacation pay earned up to termination, including vacation pay on certain termination-related wages when required. Review the final pay statement carefully.
Common problems
- Paying 4% after the employee has completed five years
- Excluding overtime or commissions without checking whether they are wages
- Confusing paid vacation days with statutory holidays
- Failing to show vacation pay clearly when it is added to each cheque
- Not paying accrued vacation pay on the final cheque
Compare this entitlement with our guides to Ontario minimum wage, Ontario overtime pay and Ontario statutory holidays.
Official source
Read Ontario’s official Vacation guide under the Employment Standards Act. Special rules or exemptions may apply to some jobs.
This article provides general information and is not legal advice.
Free tool: Use our Ontario vacation pay calculator chart to estimate vacation pay at both 4% and 6%.
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