Vacation Pay is three weeks for employees who have worked for the same employer for five years.
In Ontario, there are certain employment guidelines regarding vacation leave that provides rights to employees for time off with pay. Though there are some job categories that are exempt, most employers must abide by the Employment Standards Act (ESA) when it comes to providing time off with pay.
It’s important to note that vacation time off and pay is different than holiday pay and entitlement.
Starting January 1, 2018, vacation time and pay places employees into two groups based on the number of years an employee has worked with the same employer. Here are the key differences in the minimum vacation time and pay:
- Employees who have worked less than five years earn two weeks of vacation time after each 12-month vacation entitlement year, calculated by four percent of their gross wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or stub period (if any).
- Employees who have worked five years or more earn three weeks of vacation time, calculated by six percent of their gross wages earned in the 12-month entitlement year or stub period (if any).
As an employer, you can provide more rights and benefits to your employees other than the ESA set minimum standards. However, it cannot be less than the amounts listed above.
10 Vacation Pay Facts for Ontario Business Owners
Here are ten things to be aware of, in addition to the minimum standards for vacation leave:
- A vacation entitlement year is a recurring 12-month period which can be counted starting from the employee’s hire date or alternatively, throughout the calendar year. If it’s the latter, you must allocate a pro-rated sum of vacation time for the duration in-between the start dates of your employee and your calendar year; this is called a “stub period”.
- You are not required to provide vacation time if an employee does not finish a full vacation entitlement year or stub period. However, employees do earn vacation pay as they earn their wages.
- Vacation time is accumulated during a leave of absence, such as Parental or Maternity Leave since there is no break in the employment relationship.
- Your employees must take vacation within ten months after completing a vacation entitlement year or stub period.
- As an employer, you also have the right to schedule vacation and ensure that your employees take the time off before the end of that ten-month period.
- Employers must schedule their vacation time in blocks: two or three-week blocks, or in one-week blocks of two or three, according to the years of service. For shorter periods off (i.e. one day), your employee may request to do so, and the agreement can be made in writing or electronically.
- For most cases, earned vacation pay must be given in a lump sum before your employee takes the vacation. However, there are several exceptions to this.
- Your employee may not use all or some of their vacation time; however, as an employer, you are still obligated to provide them with their earned vacation pay. In this case, you will need an electronic or written consent along with an approval from the Director of Employment Standards.
- In cases of employment termination, you must provide your employee their earned vacation pay. This is required within seven days of the termination or on the next payday.
- If your employee asks for a record of their vacation pay (in writing), you must provide the statement within a week of the request or by the next payday.
If you are still wondering about how to calculate vacation pay, or have any questions such as, what to do about vacation leave for seasonal employees, it’s always a good idea to get help from an HR Expert.
Author: Sayara Sapkota