Vacation Time and Vacation Pay

The Labour Standards Code says that employers must give employees both vacation time and vacation pay. 

 

Vacation Time

 

Earning Vacation Time

Employers must give employees vacation time of two weeks after each period of 12 months of work and must give the vacation time within 10 months following the 12-month earning period.  In their ninth year of service (having completed 8 years), the employee must receive three weeks’ vacation time.   

Taking Vacation Time

Employers decide when employees will take their vacation time. Employers must tell employees when their vacation will begin at least one week before it begins. Many employers let their employees choose when to take vacation time; however, the employer has the final say.

Employees who work full time must take vacation time. Employees who work less than 90 percent of the regular working hours during the 12 months when they earned vacation can give up vacation time and just collect their vacation pay (see below for information on vacation pay). When an employee tells an employer in writing that the employee will give up vacation time, the employer must pay the employee vacation pay no later than one month after the date the 12 month earning period ends.

Vacation Time May Be Broken

If the employer and employee agree, the vacation time may be broken into two or more vacation periods, if the employee receives a full two weeks’ vacation (or three weeks in their ninth year onward), and the employee receives at least one unbroken week of vacation.

 

Vacation Pay

 

Earning Vacation Pay

An employee earns vacation pay during the first 12 months of work for an employer and every 12 months after that. Employee status does not affect vacation pay (full-time, part-time, seasonal, etc.). Employers must pay employees vacation pay of at least 4 percent of gross wages . Vacation pay earnings increase to 6 percent of gross wages at the start of an employee’s eighth year of service (after completing 7 years).

Paying Vacation Pay

An employer can pay vacation by:

• accumulating the vacation pay over the 12-month earning period and paying it out to employees at least one day before they take their vacation time - note an employee can ask for accumulated vacation pay earlier but the employer does not have to provide it until one day before the employee’s vacation.
• adding the vacation pay to each cheque, or
• including the vacation pay in with the employee’s hourly rate - in this case, the employer must ensure the employee’s rate of pay is at least minimum wage plus 4 percent, or 6 percent for employees from the start of their eighth year (after completing 7 years)

The employer must make it clear to each employee how they are being paid their vacation pay. The employer can do this, for example, by showing accumulated vacation pay on every pay stub, showing on the paystub that vacation pay is paid out with each pay, by having employees sign a clear statement acknowledging they are aware that vacation pay is included in their hourly rate of pay, or by stating on each paystub that vacation pay is included in the hourly rate of pay.

Employees do not earn wages when they take their vacation time. Vacation pay is intended to be the employee’s pay during their vacation time, even if the employee receives vacation pay on each pay.

If an employee’s job ends and the employee has accumulated vacation pay, the employer must pay the accumulated vacation pay within 10 days after the employment ends.

If there is a dispute and the employer cannot show vacation pay was paid, the employer will normally have to pay the vacation pay (see also information section on Records).

Employees Not Covered by the Rules

The rules on vacation time and vacation pay do not apply to the following employees:

• real estate and car salespeople
• commissioned salespeople who work outside the employer’s place of business, but not anyone with an established route
• a salesperson who sells mobile homes
• employees who work on a fishing boat
• athletes while engaged in activities related to their athletic endeavour
• employees who do domestic service for or give personal care to an immediate family member in a private home and are working for the householder (foreign worker protections do apply to this group)
• employees who do domestic service for or give personal care in a private home and are working for the householder for 24 hours or less per week (foreign worker protections do apply to this group)

 

FAQs

 

Can an employer pay vacation pay on a weekly or bi-weekly basis?

Yes. However, where an employer wishes to pay on this basis, it must be clearly communicated to the employee and records need to be retained to substantiate this. The vacation pay should also be identified on the pay stub.

 

Does vacation pay and vacation leave entitlement apply to only full time workers?

No, vacation pay and vacation leave entitlement apply to full time, part time, casual and seasonal workers.

 

Do seasonal workers who have worked for the same employer for 8 years or more qualify for three weeks vacation and vacation pay at 6% of their gross wages, even though such employees may have worked only a few months out of each year for the employer?

Seasonal workers, if they return regularly every year and are never laid off for more than 12 months, qualify for three weeks vacation time after completing 8 years and vacation pay at 6% of their gross earnings after completing 7 years with their employer.

 

What if an employee receives three weeks vacation, or more, under company policy even though the employee has not worked with the employer for 8 years?

If the benefits in place are more favourable than what the Code provides, the employee will be entitled to those benefits.

 

Who decides when the employee will take their vacation?

The employer decides when an employee will take vacation. The employer must notify the employee at least 1 week in advance of the date the employee's vacation will begin. If the employer and employee agree, the vacation time may be broken into two or more vacation periods, if the employee receives a full two weeks’ vacation (or three weeks in their ninth year onward), and the employee receives at least one unbroken week of vacation.

 

When should employees receive their vacation pay?

Employers must pay employees their vacation pay at least one day before the employee's vacation begins.

 

Does an employee have to take vacation time?

If an employee works less than 90% of the regular working hours during a continuous twelve month period, the employee can waive, in writing, their vacation leave entitlement. Full time employees must take vacation time.
Where an employee waives their vacation entitlement, the employer must pay the employee's vacation pay no later than one month after the 12 month period in which vacation was earned ends.

 

What happens with respect to vacation leave entitlement and vacation pay if the employment relationship ends before the employee has taken all vacation leave earned.

The employer must ensure the employee receives all vacation pay earned within 10 days after the employment relationship ends.

 

*Wages includes salaries, commissions, and most other forms of compensation except vacation pay.