Vacation pay in Canada is money employees earn so they can continue to receive income when they take annual vacation. For most employees in Ontario, Alberta and British Columbia, the statutory minimum is 4% of wages and rises to 6% after five years of employment.
Federally regulated employees receive an additional tier: 4% after one year, 6% after five years and 8% after 10 years, corresponding to two, three and four weeks of annual vacation.
Vacation pay and vacation time are not the same thing. Vacation pay is the money you earn. Vacation time is the actual time you are entitled to take off work. Your employer must respect both rights and can offer better vacation benefits than the statutory minimum.
On This Page:
- 1. How Much Vacation Pay Do You Get?
- 2. Vacation Pay vs. Vacation Time
- 3. How Is Vacation Pay Calculated?
- 4. When Is Vacation Pay Paid?
- 5. Unused Vacation Pay & Cashing Out
- 6. Vacation Pay When You Quit or Are Fired
How Much Vacation Pay Do You Get in Canada?
Most employees receive vacation pay equal to at least 4% of wages, increasing to 6% after five years with the same employer.
The basic statutory framework in the main jurisdictions STLAW serves is:
| Jurisdiction | Minimum Vacation | Minimum Vacation Pay |
|---|---|---|
| Ontario | 2 weeks; 3 weeks after 5 years | 4%; 6% at 5+ years |
| Alberta | 2 weeks; 3 weeks after 5 years | 4%; 6% at 5+ years |
| British Columbia | 2 weeks; 3 weeks after 5 years | 4%; 6% after 5 consecutive years |
| Federally regulated | 2 weeks after 1 year; 3 weeks after 5 years; 4 weeks after 10 years | 4%; 6% after 5 years; 8% after 10 years |
These are minimum rights. Your employment contract, workplace policy or established compensation arrangement can provide more vacation time or a higher vacation-pay rate.
What does 4% vacation pay mean?
Four per cent vacation pay means that, for every $100 of qualifying wages you earn, at least $4 is earned as vacation pay.
For example, if the applicable calculation is 4% and you earn $50,000 in qualifying wages:
$50,000 × 4% = $2,000 in vacation pay.
At 6%, the same $50,000 would produce $3,000 in vacation pay.
Does vacation pay increase after five years?
Yes. In Ontario, Alberta and BC, the statutory vacation-pay entitlement rises from 4% to 6% after the five-year service threshold is reached.
Federally regulated employees also move to 6% after five years and then to 8% after 10 consecutive years.
A workplace can provide an earlier or larger increase. If your contract promises four weeks of paid vacation after a particular service milestone, review both the time-off entitlement and how the corresponding vacation compensation is provided.
What Is the Difference Between Vacation Pay and Vacation Time?
Vacation pay is money; vacation time is time away from work. Receiving your vacation pay does not normally eliminate your statutory right to take annual vacation.
For most employees in Ontario, Alberta and BC, the minimum vacation-time framework is:
- Two weeks after completing the first year of employment
- Three weeks after reaching five years of employment
Federally regulated employees receive a fourth week after 10 consecutive years.
For the detailed rules on taking and scheduling vacation, see:
Can your employer pay vacation pay on every paycheque?
Yes. Vacation pay can be paid on each paycheque in many Canadian workplaces when the applicable legal requirements are followed.
If your employer pays your vacation pay as you earn it, you do not receive that same money a second time when your vacation begins. But you still retain your statutory vacation-time entitlement.
Your pay statements should make it possible to understand what vacation pay you have received rather than leaving you to guess whether it was included.
Can your employer deny your vacation request?
Your employer can usually control or approve when vacation is taken, but it can’t deny your minimum statutory vacation altogether.
Employers must make sure employees receive the vacation required by employment standards law. The detailed scheduling, notice and timing rules differ by jurisdiction.
A denied request for one particular week is therefore different from an employer refusing to let you take your legal vacation entitlement at all.
How Is Vacation Pay Calculated?
Vacation pay is calculated by applying your statutory or contractual vacation-pay rate to the wages included under the employment law that applies to you.
The basic formula is:
Qualifying wages × vacation-pay percentage = vacation pay.
For example:
- $60,000 × 4% = $2,400
- $60,000 × 6% = $3,600
- $60,000 × 8% = $4,800
What earnings count toward vacation pay?
Vacation pay is not necessarily calculated only on your base salary or ordinary hourly rate.
Commissions and other forms of compensation can be part of the statutory wage base. However, the exact definition of wages is one area where provincial and federal rules differ materially.
For example, Alberta excludes items such as overtime pay, general holiday pay and termination pay from its vacation-pay wage calculation. Ontario uses its own broader ESA definition of wages. Federal law also has its own definition.
Use the provincial vacation-pay page that applies to you before assuming that your employer has calculated vacation pay correctly.
Do commissions count toward vacation pay?
Commissions can count as wages for vacation-pay purposes.
If a large portion of your compensation comes from commission, incentive pay or another variable-pay arrangement, do not assume vacation pay should be calculated only on your base salary.
The exact calculation depends on the statutory wage definition that applies to your employment.
Do part-time employees get vacation pay?
Yes. Most part-time employees earn vacation pay using the same statutory percentage as full-time employees.
The dollar amount can be smaller because a part-time employee earns fewer total wages, but working part time does not by itself eliminate the vacation-pay entitlement.
Casual and temporary employees can also have vacation-pay rights unless a specific legal exemption applies.
When Does Your Employer Have to Pay Vacation Pay?
Vacation pay is normally paid before or around the time you take vacation, although many employers lawfully pay it as it accrues on each paycheque.
The exact payment rule depends on where you work.
For the detailed rules, see Vacation Pay Ontario, Vacation Pay Alberta or Vacation Pay BC.
Can your employer include vacation pay in your salary?
Your employer can structure compensation so that vacation is paid through regular salary or payroll, but the arrangement must still provide at least your legal vacation-pay entitlement.
An employer cannot simply say “vacation pay is included” if the result is that you receive less than the statutory minimum or cannot determine what you were actually paid.
If your written employment contract promises more vacation than the minimum, those contractual rights also need to be considered.
Can Your Employer Take Away Unused Vacation Pay?
No. Earned statutory vacation pay does not simply disappear because you did not use your vacation by an internal company deadline.
This is where “use it or lose it” policies are often misunderstood.
An employer can have rules about scheduling vacation and can require employees to take statutory vacation within the legally permitted period. A policy can also govern extra contractual vacation days that exceed minimum employment standards.
But an internal policy cannot erase statutory vacation pay that has already been earned and remains unpaid.
Can you cash out your vacation pay instead of taking vacation?
Vacation pay and vacation time must be treated separately, so receiving the money does not automatically let you give up the statutory time off.
The rules for waiving, postponing or cashing out statutory vacation time differ by jurisdiction and can require specific agreements or approvals.
For a common example, see Can I Cash Out My Vacation Pay in BC?
What if your employer pays vacation pay every two weeks?
If vacation pay has already been properly paid on every paycheque, there may be no accumulated vacation-pay balance to cash out later.
You should still receive the statutory vacation time you are entitled to take.
Check your pay stubs before assuming vacation pay is missing. If the employer says it was already paid, ask for a breakdown showing when and how much was paid.
Do You Get Vacation Pay If You Quit or Are Fired?
Yes. When your employment ends, your employer must pay the vacation pay you earned and have not yet received.
That applies whether:
- You resign
- You are fired without cause
- You are dismissed for cause
- You are permanently laid off
- Your employment otherwise comes to an end
The final-payment deadline differs by jurisdiction, but earned vacation pay remains part of the compensation that must be accounted for when your employment ends.
Is vacation pay the same as severance pay?
No. Vacation pay is earned compensation and is completely separate from your severance entitlement.
An employer can correctly pay your outstanding vacation balance and still offer you far less termination compensation than you are legally owed.
For non-unionized employees, full severance pay can be substantially greater than minimum employment-standards amounts and can reach as much as 24 months’ pay.
Do you get vacation pay during a termination notice period?
Vacation-pay rights can continue to affect compensation during a statutory or common-law notice period.
The exact treatment depends on the jurisdiction, the type of termination compensation and your employment contract.
For example, Ontario requires vacation pay on statutory termination pay, while using a different rule for statutory severance pay. Those jurisdiction-specific calculations belong on the provincial and termination-compensation pages rather than being treated as one Canada-wide formula.
Vacation Pay by Province
The national framework is straightforward: most employees start at 4% vacation pay and move to 6% after five years, while the provincial pages explain the exact calculation, payment and scheduling rules.
- Vacation Pay Ontario — 4% and 6% rates, qualifying wages, payment timing and final vacation pay.
- Vacation Time Ontario — two- and three-week entitlements, scheduling and unused vacation time.
- Vacation Pay Alberta — Alberta vacation-pay calculations for hourly, salaried and commission employees.
- Vacation Time Alberta — Alberta vacation scheduling and annual time-off rights.
- Vacation Pay British Columbia — BC’s 4% and 6% rules, total wages and payment deadlines.
- Vacation Time British Columbia — BC annual vacation and scheduling rules.
- Federally Regulated Employees — federal vacation rights, including the 8% / four-week tier after 10 years.
Vacation Pay Canada FAQs
Is vacation pay mandatory in Canada?
Yes. Most employees covered by provincial or federal employment standards legislation have a legal right to vacation pay. Specific exemptions can apply to certain occupations and industries.
Is vacation pay 4% or 6%?
For most employees in Ontario, Alberta and BC, vacation pay starts at 4% and rises to 6% after five years of employment. Federally regulated employees receive 8% after 10 consecutive years.
How much vacation pay is $1,000 in wages?
At 4%, $1,000 of qualifying wages produces $40 in vacation pay. At 6%, it produces $60. At 8%, it produces $80.
Do you earn vacation pay in your first year?
In Ontario and Alberta, employees can earn vacation pay before they become entitled to take their first full annual vacation. BC vacation pay begins after the short statutory qualifying period. Federally regulated employment uses its own annual-vacation framework.
Does vacation pay expire?
Earned statutory vacation pay cannot simply be erased by an employer’s internal expiry date. Vacation-time scheduling and additional contractual vacation above the statutory minimum can be governed by separate rules.
Do you get vacation pay if you are fired for cause?
Yes. A cause allegation does not erase vacation pay you already earned. Whether the employer actually has legal cause to deny termination compensation is a separate question.
Can your employer offer more than 4% or 6%?
Yes. Employment standards create minimum vacation rights. An employment contract or workplace policy can provide four, five or more weeks of vacation and corresponding compensation.
Get Help With Unpaid Vacation Pay
Vacation pay is part of the compensation you earn. Your employer can’t simply keep statutory vacation pay that is legally owed to you.
Samfiru Tumarkin LLP helps non-unionized employees deal with unpaid compensation, disputed vacation pay and termination packages that fail to include everything the employee is owed.
If your employment has ended, our employment lawyers can review your vacation pay together with your termination and severance rights and secure the full compensation you are legally entitled to receive.