Q&A: Vacation Entitlements for Ontario Employees and Employers

As an employee in Ontario, it is important to understand your vacation entitlements. This Q&A article seeks to provide some answers to the more frequent questions we receive.

The Ontario Employment Standards Act, 2000 (ESA) is the law governing minimum vacation requirements in the province. As such, in order to determine your particular vacation entitlement, it will be necessary to review the ESA as a starting point, and consider any additional entitlement set out in your employment agreement or, if you are a unionized employee, in a collective agreement.

Q: What is the difference between vacation time and vacation pay?

A: Vacation Pay and Vacation Time are concepts set out in Part XI of the ESA.

Vacation Pay is a required payment under section 35.2 of the ESA. If you are paid by the hour in Ontario, you are entitled to receive four percent (4%) vacation pay, which may be banked or paid out each pay period. For salaried employees, the 4% entitlement is your entitlement to paid vacation time. This 4% is equivalent to 10 days of paid time off for a full time employee each year. In the event that your employment is terminated and you have outstanding vacation time accrued, you are entitled to payment in lieu of that time.

Vacation Time is time earned each year by employees. Employees earn a minimum of two weeks of vacation time upon completion of every 12-month vacation entitlement year. The ESA does not provide for any increase to the two-week vacation time entitlement based on length of employment although your employment agreement may do so. 

Q: May I take vacation in the first year of my employment?

A: The ESA states that employees must work for a year before they are entitled to two weeks' paid vacation time.  Accordingly, employers are not obliged to grant paid vacation time off in the first year of employment, as the 4% vacation pay accrues. That said, employers are obligated to respect statutory holidays, and have discretion to allow for paid or unpaid leave, as they may choose.

Q: Do I have to take my vacation in blocks or may I take long weekends?

A: Your vacation plans should be approved by your employer. Your employer is entitled to put in place vacation time policies that set out how and when vacation may be taken. This is a common practice, and reflective of operational realities that employers face. As such, depending on the time of year, and the nature of the business in which you work, you may be able to take a series of long weekends. The best way to approach this, is to engage with your employer in a timely manner and seek agreement to structure your vacation time in this way.

Q: What are the rules for vacation pay for temporary and staffing placement employees?

A: Regardless of how you are employed, you are entitled to the 4% vacation payment while working. This does not necessarily mean that you may take time off if you are on a short term placement within a particular workplace, however, you will still accrue vacation pay.

Q: Do I lose statutory holidays when they fall during my vacation week?

A: No. If a statutory holiday falls within the block of time you take as vacation, the employer cannot count that day as part of your vacation time. Notwithstanding an agreement in writing to the contrary, the law states that an employer must allow the employee to take that extra day off within a 3-month period. An agreement between the employer and employee can allow the employee to vary this timeline by up to 12 months from the statutory holiday.

Q: Do I get to accrue vacation time while on leaves of absence?

A: If an employee is on an approved leave, such as a maternity leave, vacation time continues to accrue, however payment is not required to accrue. This means that while away on approved leave, the employee can accumulate time, but they may not accumulate money in the bank, since the payment is a percentage of earnings. If the employee is not earning an income through wages, they are not earning an accumulation of vacation payment.

Q: Can I bank my vacation time?

A: Employees cannot be penalized if they fail to use the full 2 weeks of paid vacation time within a year. They can bank that time for up to 10 months. If an employee receives more than the minimum 2 weeks, that additional time may, however, be forfeited if the employer has a policy in place to that effect.

If you have any issues with your vacation entitlement, it is worth speaking with an employment lawyer about your rights. Equally, if you are an employer, ensure that you are in compliance with the ESA's requirements, particularly if varying terms in a written employment agreement. Your employees' employment agreements, and associated policies, should clearly specify entitlements, and satisfy in all circumstances at least the minimum requirements of the ESA.

For more information on your vacation entitlements, visit the Ontario Ministry of Labour website.

*This Q&A session provides general information. It should not be relied upon as specific legal advice. Please contact an employment lawyer to discuss your specific circumstances.

*Vey Willetts LLP is an Ottawa-based employment and labour law firm that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in the National Capital Region and across Ontario.