Canadian employees are entitled to minimum vacation entitlements under provincial employment standards legislation — both vacation time (days off) and vacation pay (a percentage of earnings). The minimum entitlements increase with years of service. Federally regulated employees are covered by the Canada Labour Code. Vacation pay must be paid when vacation is taken or, if the employee agrees, as part of each paycheque.
Quick Answer
In Ontario, employees with less than 5 years of service receive a minimum of 2 weeks vacation time and 4% vacation pay (based on gross employment earnings). After 5 years with the same employer, the minimum rises to 3 weeks and 6% vacation pay. On a $60,000 annual salary, 4% vacation pay = $2,400 per year ($1,200 per 2-week vacation period).
Minimum Vacation Entitlements by Province
| Province |
0-4 Years |
5+ Years |
Vacation Pay % |
| Ontario |
2 weeks |
3 weeks |
4% / 6% |
| British Columbia |
2 weeks |
3 weeks |
4% / 6% |
| Alberta |
2 weeks |
3 weeks (10+ yrs) |
4% / 6% |
| Quebec |
1 week (1 yr) / 2 weeks |
3 weeks |
4% / 6% |
| Manitoba |
2 weeks |
3 weeks |
4% / 6% |
| Saskatchewan |
3 weeks |
4 weeks |
6% / 8% |
| Nova Scotia |
2 weeks |
3 weeks |
4% / 6% |
| New Brunswick |
2 weeks |
3 weeks |
4% / 6% |
| PEI |
2 weeks |
3 weeks |
4% / 6% |
| Newfoundland and Labrador |
2 weeks |
3 weeks |
4% / 6% |
| Federal (CLC) |
2 weeks |
3 weeks (6 yrs) |
4% / 6% |
Saskatchewan is notably more generous — minimum 3 weeks (6%) for most employees.
What Vacation Pay Is Calculated On
Vacation pay is a percentage of all gross earnings in the prior year or vacation entitlement year, including: regular wages, overtime, commissions, statutory holiday pay, and sick pay. Vacation pay is not calculated on vacation pay itself.
Tax on Vacation Pay
Vacation pay is fully taxable as employment income. When paid as a lump sum (e.g., on termination), the employer uses the lump sum withholding rate or the annualized method. When paid as part of regular pay (vacation taken as a paid leave), it is subject to standard payroll withholding.
Verified Against Source
Ontario vacation entitlements are set under the Employment Standards Act, 2000, sections 33-41. BC vacation is in the Employment Standards Act, RSBC 1996, c. 113, Part 7. Saskatchewan follows the Saskatchewan Employment Act, 2013. Source: ontario.ca/page/vacation-and-vacation-pay
Frequently asked questions
- How much vacation pay are Canadian employees entitled to?
- Most Canadian provinces require a minimum of 4% vacation pay on gross earnings for employees with less than 5 years of service, rising to 6% after 5 years. Saskatchewan is more generous: 6% (3 weeks) for employees with less than 10 years, 8% (4 weeks) for 10+ years. Vacation pay entitlements are set by provincial employment standards legislation.
Is vacation pay in addition to salary?
Vacation pay is calculated as a percentage of your earned wages — it is not extra money on top of salary; it represents the payment for the time off. When you take vacation, your regular pay continues (funded by the accrued vacation pay). If vacation pay is paid out as a separate cheque or included in each pay, it supplements your regular gross pay.
How is vacation pay calculated on a $70,000 salary?
On $70,000 gross annual earnings with 4% vacation pay: $70,000 x 4% = $2,800 in vacation pay for the year. This $2,800 covers 2 weeks of vacation pay ($1,400 per week for a $70,000/year employee = $70,000 / 52 weeks = $1,346/week x 2 = $2,692 approximately). The percentage method ensures variable earners receive proportional vacation pay.
What happens to unused vacation pay if I quit or am terminated?
On termination or resignation, any accrued and unused vacation pay must be paid out as a lump sum. In Ontario, this must be paid within 7 days of termination or on the next regular payday (whichever comes first). Unpaid vacation pay is a debt of the employer and can be pursued through the Ministry of Labour or small claims court.
Can employers pay vacation pay as a percentage on each cheque?
In some provinces (BC, Alberta, Ontario for some situations), employers can pay vacation pay as a percentage on each regular paycheque rather than setting aside a balance for time off. This requires employee consent in writing in some provinces. The percentage shows separately on the pay stub. The employee still has the right to take vacation time off, even if pay has already been disbursed.
Does vacation pay apply to overtime and commissions?
Yes. Vacation pay is calculated on total gross earnings including overtime pay, commissions, bonuses (that are part of regular compensation), statutory holiday pay, and sick pay. Some bonuses contingent on performance may be treated differently — check your province's rules and employment contract.
How does Quebec vacation pay work differently?
Quebec employees earn a minimum of 1 week vacation after 1 year and 2 weeks after 1 year of service (the 1 week applies in the first year). The vacation pay percentage is 4% for employees with fewer than 3 years and 6% for employees with 3+ years. Quebec uses a different reference year calculation (May 1 to April 30) unless the employer uses another period.
Can employers provide more vacation than the minimum?
Yes. Employment standards set the minimum. Many employers provide more — 3 or 4 weeks from the start, with accruals based on tenure. Collective agreements often provide significantly more vacation for unionized workers. The minimum in the Employment Standards Act is a floor, not a ceiling.
What is the reference year for vacation entitlements?
In most provinces, vacation entitlements are based on a 12-month reference year (often the calendar year or the employee's anniversary year). Vacation earned in the reference year must typically be taken in the following vacation entitlement year. Unused vacation at the end of the entitlement year must be paid out or carried forward (province-specific rules apply).
Is vacation pay taxable?
Yes. Vacation pay is fully taxable as employment income in the year received. When paid with regular pay (during vacation), it is subject to standard payroll withholding. When paid as a lump sum (on termination), higher withholding may apply. Your T4 includes all vacation pay as part of box 14 (employment income).
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