Does Vacation Pay Include Overtime in Alberta? What Employees Should Know

Does Vacation Pay Include Overtime in Alberta?

In most cases, no — overtime pay is not included when calculating vacation pay in Alberta.

Vacation pay is typically based on regular wages, not overtime earnings.

However, there are exceptions depending on:

• Your employment agreement
• How your employer defines “wages”
• Specific workplace policies

Why Overtime Is Usually Excluded

Under Alberta’s Employment Standards Code (ESC), vacation pay is calculated based on wages — but not all types of income are treated the same.

Generally Included:

• Regular wages (salary or hourly pay)
• Commission
• Certain bonuses

Generally Excluded:

• Overtime pay
• General holiday pay
• Tips and gratuities
• Expense reimbursements

Are There Exceptions?

Yes — in some cases, overtime can be included.

This may happen if:

• Your employment contract includes overtime in vacation pay calculations
• Your employer has a policy that treats overtime as part of wages

Why This Matters For Employees

If your employer includes or excludes the wrong earnings, it can affect how much you’re paid.

Common issues include:

• Including overtime when they shouldn’t (rare)
• Excluding earnings that should count
• Misunderstanding what qualifies as wages

Even small errors can add up over time.

Example: Vacation Pay With and Without Overtime

Scenario:

• Regular wages: $50,000
• Overtime earnings: $5,000
• Total income: $55,000

If Overtime Is Excluded:

Vacation pay = $50,000 × 4% = $2,000

If Overtime Is Included (Only If Agreed):

Vacation pay = $55,000 × 4% = $2,200

What If Your Employer Calculates Vacation Pay Incorrectly?

If your employer:

• Includes or excludes the wrong earnings
• Applies the wrong percentage
• Miscalculates your total wages

You may be owed additional compensation.

Does This Apply to Part-Time Employees?

Yes — the same rules apply to part-time employees.

What Happens When You Leave Your Job?

If you quit or are terminated:

• Your employer must pay out all earned vacation pay — based on correct calculations.

FAQ: Vacation Pay and Overtime in Alberta

Is overtime ever included in vacation pay?

Usually no — unless your employment agreement says otherwise.

How do I know what counts as wages?

Review your pay structure and employment contract.

What if my employer included overtime incorrectly?

You may be entitled to corrections or additional pay.

Can I challenge how my vacation pay was calculated?

Yes — if you believe it was calculated incorrectly, you may have legal options.

Think Your Vacation Pay Was Calculated Incorrectly?

If overtime or other earnings were handled incorrectly, you could be owed money.

This is especially important if:

• You regularly work overtime
• Your pay varies
• You’ve recently left your job

At Samfiru Tumarkin LLP, our employment lawyers in Alberta can review your situation and explain your options.