Vacation pay in BC is money employees earn to provide income when they take vacation time. For most employees covered by British Columbia’s Employment Standards Act, the minimum vacation pay rate is 4% of total wages. After completing five consecutive years with the same employer, the minimum rate increases to 6%.
Vacation pay and vacation time are connected, but they are not the same thing. Vacation pay is the money you earn. Vacation time is the time you are entitled to take off work.
This guide explains how vacation pay works in BC, how it is calculated, what wages are included and what happens to your vacation pay when you quit or lose your job.
On This Page:
- 1. What Is Vacation Pay?
- 2. BC Vacation Pay Rules
- 3. 4% vs. 6% Vacation Pay
- 4. How to Calculate Vacation Pay
- 5. Wages Included in the Calculation
- 6. Salaried, Part-Time and Commission Employees
- 7. When Vacation Pay Must Be Paid
- 8. Vacation Pay After 10 Years
- 9. Vacation Pay When Employment Ends
- 10. Vacation Pay FAQs
What Is Vacation Pay In BC?
Vacation pay is a percentage of the wages you earn that is set aside to compensate you for your annual vacation.
Most employees covered by the BC Employment Standards Act become entitled to vacation pay after five calendar days of employment, regardless of how many hours they worked during those five days.
Vacation pay is based on your total eligible wages. The minimum percentage depends on how long you have continuously worked for the same employer:
- Less than five completed years: At least 4% of total wages
- After five completed years: At least 6% of total wages
What Is The Difference Between Vacation Pay And Vacation Time?
Vacation pay is the money you receive for your vacation. Vacation time is the time you are entitled to take away from work.
For example, an employee may be entitled to two weeks of vacation time and vacation pay equal to at least 4% of the wages they earned.
Receiving vacation pay on every paycheque does not automatically eliminate your right to take vacation time.
What Are The Vacation Pay Rules In BC?
The main BC vacation pay rules are straightforward:
- Employees generally become entitled to vacation pay after five calendar days of employment.
- The minimum rate is 4% of total wages during the first five years of employment.
- The minimum rate increases to 6% after five consecutive years of employment.
- Vacation pay must generally be paid at least seven days before annual vacation starts.
- Vacation pay can be included on each regular paycheque if the employee and employer agree to this in writing.
- Outstanding vacation pay must be paid when employment ends.
Is Vacation Pay Mandatory In BC?
Yes, for most employees covered by the BC Employment Standards Act. An employer can’t simply decide not to provide the minimum vacation pay required by law.
These rights can apply to full-time, part-time, casual, salaried and commission-based employees. However, certain occupations may have special rules or exclusions.
Employees who work in federally regulated industries, such as banks, airlines and telecommunications, may be covered by the Canada Labour Code instead of BC employment standards.
How Much Is Vacation Pay In BC?
The minimum vacation pay percentage in BC is based on your length of continuous employment.
| Length Of Employment | Minimum Vacation Pay |
|---|---|
| After five calendar days and before completing five years | 4% of total wages |
| After completing five consecutive years | 6% of total wages |
What Happens When I Reach Five Years Of Employment?
Once you complete five consecutive years with the same employer, your minimum vacation pay entitlement increases from 4% to 6%.
The 6% entitlement applies to the wages earned during your fifth year of employment.
This is especially important for employees who receive 4% vacation pay on every paycheque. After completing five years, the employer may need to make a one-time adjustment so the employee receives the full 6% owed on wages earned during the fifth year.
How Is Vacation Pay Calculated In BC?
To calculate minimum vacation pay in BC, multiply your total eligible wages by your vacation pay rate.
Example: 4% Vacation Pay
An employee who has worked for the company for three years earned $60,000 in eligible wages.
$60,000 × 4% = $2,400 in minimum vacation pay
Example: 6% Vacation Pay
An employee who has completed eight years with the company earned $60,000 in eligible wages.
$60,000 × 6% = $3,600 in minimum vacation pay
The calculation can become more complicated when compensation includes commissions, overtime, bonuses, termination pay or other forms of wages.
What Wages Are Included When Calculating Vacation Pay?
Vacation pay is calculated using money that meets the definition of wages under the BC Employment Standards Act.
Total wages can include:
- regular wages;
- salary;
- commissions;
- overtime pay;
- statutory holiday pay;
- paid sick days required by the Employment Standards Act;
- bonuses that meet the legal definition of wages;
- previously paid vacation pay; and
- certain statutory termination payments.
Is Vacation Pay Calculated On Previous Vacation Pay?
Yes. Vacation pay that has already been paid becomes part of the total wages used to calculate vacation pay for the following year.
This is one reason a vacation pay calculation may not always match a simple percentage of base salary.
Is Vacation Pay Owed On Bonuses?
It can be. A bonus may be included if it meets the definition of wages under BC employment standards.
Not every bonus is automatically treated the same way. The wording of the bonus plan and the reason for the payment can matter.
Is Vacation Pay Owed On Commissions?
Yes. Commission employees are entitled to vacation pay on commissions that form part of their wages.
A commission that becomes payable while you are on vacation is still compensation for work already performed. Your employer cannot simply label that commission payment as vacation pay.
How Does Vacation Pay Work For Salaried, Part-Time And Commission Employees?
Vacation Pay For Salaried Employees In BC
Salaried employees are entitled to the same minimum vacation pay protections as other employees covered by the Employment Standards Act.
If your employer continues your salary while you are on vacation and you perform no work during that time, the salary paid during the vacation can count as vacation pay. However, the amount must still equal at least the 4% or 6% minimum you are owed.
Vacation Pay For Part-Time And Casual Employees In BC
Part-time and casual employees can also be entitled to vacation pay. The percentage is based on eligible wages, not on whether you work a full-time schedule.
An employee can qualify after five calendar days of employment even if they worked only a small number of hours during that period.
Vacation Pay For Commission Employees In BC
Employees paid entirely or partly by commission are generally entitled to vacation pay on commission earnings.
If a commission becomes payable after your employment ends, you may also be entitled to vacation pay on that commission when it is eventually paid.
When Must Vacation Pay Be Paid In BC?
Vacation pay must generally be paid at least seven days before your annual vacation begins.
There is one major alternative: you and your employer can agree in writing that vacation pay will be included on your scheduled paydays.
Can Vacation Pay Be Paid On Every Paycheque?
Yes, if you and your employer agree to it in writing.
Your pay statement should clearly show the vacation pay you receive.
If you have been receiving 4% vacation pay on each paycheque and then complete five years of employment, your employer must begin paying 6%. An additional adjustment may also be required to make up the extra 2% on wages earned during your fifth year.
Can I Cash Out My Vacation Pay Instead Of Taking Vacation?
Receiving vacation pay on every paycheque does not mean you have given up your right to take annual vacation time.
Vacation pay and vacation time are separate legal entitlements. An employer cannot avoid the rules about annual vacation simply by adding vacation pay to each cheque.
How Much Vacation Pay Do You Get After 10 Years In BC?
The minimum vacation pay rate does not increase again after 10 years under the BC Employment Standards Act.
The minimum statutory rates are:
- 4% before completing five consecutive years of employment; and
- 6% after completing five consecutive years.
An employee with 10, 15 or 20 years of service is therefore still entitled to a minimum of 6% vacation pay under the Employment Standards Act.
However, your employment contract, company policy or workplace practice may provide a greater entitlement, such as four or more weeks of vacation and a higher vacation pay rate.
What Happens To Vacation Pay When Employment Ends?
When your employment ends, your employer must pay any vacation pay you have earned and are still owed.
The payment deadline depends on who ended the employment relationship:
- If your employer fires or terminates you: All outstanding wages, including vacation pay, must generally be paid within 48 hours.
- If you quit: All outstanding wages, including vacation pay, must generally be paid within six days.
Do I Get Vacation Pay If I Am Fired?
Yes. Being fired does not erase vacation pay you already earned.
You may also be entitled to vacation pay on statutory termination pay provided instead of working notice.
If your employer ends your job without cause, vacation pay may be only one part of what you are owed. A non-unionized employee may also be entitled to a full severance package in BC, which can be worth as much as 24 months’ pay in some cases.
Do I Get Vacation Pay If I Quit?
Yes. Your employer must still pay the vacation pay you earned and have not yet received.
Quitting does not allow an employer to keep outstanding vacation pay.
Is Vacation Pay Owed On Severance Pay In BC?
Vacation pay is payable on statutory compensation provided instead of written termination notice under BC employment standards.
A full common law severance package can involve additional rights beyond the Employment Standards Act. The treatment of vacation pay during the full notice period can depend on your employment contract and the circumstances of your termination.
If your severance offer is too low, you may have a wrongful dismissal claim in BC.
Vacation Pay BC FAQs
What percentage is vacation pay in BC?
The minimum vacation pay rate is generally 4% of total wages before you complete five consecutive years of employment and 6% after completing five years.
How do I calculate 4% vacation pay?
Multiply your total eligible wages by 0.04. For example, 4% of $50,000 is $2,000.
How do I calculate 6% vacation pay?
Multiply your total eligible wages by 0.06. For example, 6% of $50,000 is $3,000.
Does vacation pay increase after five years in BC?
Yes. The minimum rate increases from 4% to 6% after you complete five consecutive years with the same employer.
Does vacation pay increase after 10 years in BC?
No further increase is required by the BC Employment Standards Act after 10 years. The minimum remains 6%, although your contract or workplace policy may provide more.
Is vacation pay taxable in BC?
Yes. Vacation pay is employment income and is subject to payroll deductions, including income tax, CPP contributions and EI premiums.
Do salaried employees get vacation pay in BC?
Yes. Salaried employees covered by the Employment Standards Act are entitled to minimum vacation pay. Salary that continues while the employee is on vacation can count as vacation pay if it meets the minimum amount legally owed.
Do part-time employees get vacation pay in BC?
Yes. Part-time employees can be entitled to the same 4% and 6% minimum rates. The amount is based on eligible wages earned.
Do commission employees get vacation pay in BC?
Yes. Employees paid entirely or partly by commission are generally entitled to vacation pay on commission earnings that count as wages.
Do I earn vacation pay while on maternity or medical leave?
A protected or authorized leave generally continues to count toward your length of continuous employment. However, statutory vacation pay is based on wages earned, so a period with no wages can reduce the amount of vacation pay generated during that year.
Can my employer include vacation pay on every paycheque?
Yes, if you and your employer agree to this in writing. Paying vacation pay on each cheque does not eliminate your separate right to annual vacation time.
Is vacation pay calculated on previous vacation pay?
Yes. Vacation pay already received becomes part of the total wages used to calculate vacation pay for the following year.
What if my employer does not pay my vacation pay?
Keep copies of your pay statements, employment contract, vacation records and communications with your employer. You may have options through the BC Employment Standards Branch or other legal processes. Time limits can apply, so do not delay getting advice.
Do these rules apply to unionized employees?
A collective agreement can contain vacation provisions that meet or exceed minimum employment standards. Unionized employees generally need to address disputes through their union and the grievance process.
Do these rules apply to federally regulated employees in BC?
Not necessarily. Employees in federally regulated industries, including many banks, airlines and telecommunications companies, are generally covered by the Canada Labour Code and different vacation rules can apply.
Not Paid The Vacation Pay You Are Owed?
Your employer can’t simply ignore vacation pay you earned or use a termination to make it disappear.
If you are a non-unionized employee in British Columbia and your vacation pay issue is connected to a termination, severance offer or other major workplace dispute, the employment lawyers at Samfiru Tumarkin LLP can explain your rights and options.
Contact us before you sign a severance offer or give up compensation you may be owed.