Vacation Pay Ontario: Know Your Employee Rights (2025)

In Ontario, employees are legally entitled to vacation pay—money earned while taking time off work. Whether you’re paid hourly, on salary, or by commission, the Employment Standards Act (ESA) guarantees this benefit.

This guide breaks down how vacation pay works, who qualifies, how it’s calculated, and what you’re owed when you leave a job. We’ve included answers to the top questions Ontarians ask about vacation pay—and how to get legal help if your rights are denied.

What is Vacation Pay in Ontario?

Vacation pay is money your employer must pay you when you take time off work for vacation. It’s calculated as a percentage of your earnings and begins to accumulate from your first day on the job.

In Ontario, vacation pay is required under the ESA. It ensures that you don’t lose income while taking earned time off.

What’s the Difference Between Vacation Pay and Vacation Time in Ontario?

Though often used interchangeably, vacation pay and vacation time are not the same thing under Ontario’s employment laws.

• Vacation time is the time off work that you are entitled to take — typically 2 or 3 weeks per year depending on your length of service.
• Vacation pay is the money you’re paid for that time off. It’s calculated as a percentage (4% or 6%) of the wages you earned during your vacation entitlement year.

How is Vacation Pay Calculated in Ontario?

In Ontario, vacation pay is calculated as a percentage of your total wages earned during the vacation entitlement year.

The standard rate is 4% or 6%, depending on how long you’ve worked for your employer. Your total wages include:

• Regular pay (salary or hourly)
• Overtime pay
• Statutory holiday pay
• Commissions and non-discretionary bonuses
• Termination or severance pay (if earned during that year)

Vacation pay is not calculated on top of previously paid vacation pay — it only applies to newly earned wages during the entitlement year.

How Much is Vacation Pay in Ontario?

Under the ESA, vacation pay is based on your length of service with your employer:

When Did 6% Vacation Pay Start in Ontario?

The 6% vacation pay entitlement began on December 31, 2017, for employees with five or more years of continuous service.

Under the ESA, employers are only required to provide 6% vacation pay if the employee’s vacation entitlement year or “stub period” ends on or after that date.

Is Vacation Pay Mandatory in Ontario?

Yes. Employers in Ontario are legally required to provide vacation pay to employees under the Employment Standards Act (ESA).

This includes full-time, part-time, casual, salaried, hourly, and commissioned workers. The right to vacation pay can’t be waived, even by contract.

Some employers incorrectly calculate vacation pay — especially for employees who earn commissions or variable income — by applying the percentage only to base salary. This is not permitted under the ESA.

When is Vacation Pay Paid Out in Ontario?

Under the ESA, vacation pay can be paid in one of three ways—as long as it’s clearly outlined in your employment agreement and follows the required timeline.

• Lump sum: Paid in full before the employee begins their vacation.
• With each paycheque: Paid as it accrues (e.g. 4% or 6% added to each pay period), if the employee agrees in writing.
• On regular pay schedule: Paid on your standard payday during or right after the vacation is taken.

Do Employees Get Paid For Unused Vacation in Ontario?

Yes. If you don’t use your vacation time, your employer must pay out the unused vacation pay. However, the ESA requires that vacation time be taken—or paid out—within 10 months of the end of the entitlement year.

This prevents employees from carrying vacation indefinitely and ensures compliance with minimum standards. Employers can also create more generous policies in their employment contracts or handbooks.

What Happens to Vacation Pay When You’re Terminated in Ontario?

If you’re fired, laid off, or let go from your job in Ontario, your employer must pay out any vacation pay you’ve earned but haven’t received.

This includes:

• Vacation pay accrued during the current vacation year
• Vacation pay carried over from previous years
• Vacation pay on termination notice or severance periods

By law, vacation pay must be paid within 7 days of termination, or by your next regular payday—whichever is later.

Lost Your Job? Speak to an Ontario Employment Lawyer First

If you’ve been let go, don’t sign anything until you speak to a lawyer. Many employees are pressured to accept severance packages that are far below what they’re actually owed—including vacation pay, termination pay, and more. More than 90% of employees are wrongfully dismissed from their job in Ontario.

At Samfiru Tumarkin LLP, we’ve helped tens of thousands of non-unionized employees across Ontario secure fair compensation after a termination or layoff. Our employment lawyer Toronto and Ottawa teams offer free consultations in some termination situations and operate on a contingency fee model in most employment matters.*

• 👥 Over 50,000 clients helped across Canada
• 💰 Millions recovered in severance and compensation
• ⚖️ No win, no fee — you don’t pay unless we win*
• ⭐ 2,311 5-star Google reviews across Ontario (4.8 average)
• 🏆 Recognized as one of Canada’s Best Law Firms by The Globe and Mail

* Conditions apply. Not all cases qualify.

Contact us or call 1-855-821-5900 to learn your rights before you sign away your severance.