As a business owner (especially if you have just started your business), you might have some questions regarding vacation entitlements, vacation time, vacation pay and how it’s calculated, and more.

Today we’ll have a brief overview and take a quick look at everything you need to know regarding vacation time.

How Much Vacation Time Are Employees Entitled To ?

As you probably know already, the basic vacation entitlement across Canada is 2 weeks for every completed year of employment. This extends to 3 weeks of vacation after 5 consecutive years of employment (with the same employer) and 4 weeks after 10 completed years of employment. 

As the term suggests, a “year of employment” is defined by the period of continuous employment beginning on the date that they are hired, and ending 12 months later.

It is important to know when an employee has completed a year of employment, because they are eligible to take vacation time with vacation pay afterwards. Employers may also elect to provide employees with vacation entitlements prior to this 12 month period, although they are not legally required to.  Note – whenever an employer provides a greater right or benefit than the minimum standards under the legislation, the employer must adhere to that.

Vacation Pay

When calculating vacation pay, you will take into account the percentage of vacationable earnings that an employee earns during the “year of employment”.  Vacationable earnings are simply employee earnings on which vacation pay is earned.

For example, in Ontario, an employee that is entitled to 2 weeks of vacation has 4% of earnings as vacation pay in the entitlement year. After 5 years of continuous employment with the same employer, the employee will then be entitled to 3 weeks vacation and 6% of earnings as vacation pay in the following entitlement years.

Although provinces like British Columbia and Alberta have similar figures as the example above, these figures may vary according to what province you are in.

For example, Saskatchewan states that an employee is entitled to 3 weeks of vacation time and 5.77% (3/52) of their wages as vacation pay during their first 9 years of employment. This is raised to 4 weeks of vacation time and 7.69% (4/52) of wages as vacation pay in their 10th year of continuous employment with the same employer.

The chart below provides a summary of the vacation entitlements across Canada:

LocationAnnual Vacation LengthTime frame in which
vacation must be used
Vacation Pay
(percentage of
vacationable earnings)
Federal2 weeks
3 weeks after 6 consecutive years of work
10 months4%
6% after 6 years
Alberta2 weeks
3 weeks after 5 consecutive years of work
12 months4%
6% after 5 years
British Columbia2 weeks
3 weeks after 5 consecutive years of work
12 months4% after 5 calendar days of employment
6% after 5 years
Manitoba2 weeks
3 weeks after 5 consecutive years of work
10 months4%
6% after 5 years
New Brunswick2 weeks
3 weeks after 8 consecutive years of work
4 months4%
6% after 8 years
Newfoundland2 weeks
3 weeks after 15 consecutive years of work
10 months4% after 5 work days
6% after 15 years
Northwest Territories2 weeks
3 weeks after 6 consecutive years of work
6 months4%
6% after 6 years
Nova Scotia2 weeks
3 weeks after 8 consecutive years of work
10 months4%
6% after 8 years
Ontario2 weeks
3 weeks after 5 consecutive years of work
10 months4%
6% after 5 years
Prince Edward Island2 weeks
3 weeks after 8 consecutive years of work
4 months4%
6% after 8 years
Québec2 weeks
3 weeks after 5 consecutive years of work
12 months4%
6% after 5 years
Saskatchewan2 weeks
3 weeks after 10 consecutive years of work
12 months4%
6% after 5 years
Yukon Territories2 weeks after 12 months 10 months4%
after 14 consecutive days
of employment

Check the links below for updated information and province specific rules regarding vacation pay and eligibility.

Vacation Pay Example:

Karni has had a year of continuous, uninterrupted employment and qualifies for 2 weeks of vacation. During these 2 weeks of vacation, she is also entitled to 4% of vacation pay.

Karni earned $55,000 in the reference year.

Factoring in Karni’s vacationable earnings during this employment year and multiplying it by her vacation pay of 4% (55,000 x 4%) we arrive at $2200. This means that Karni is entitled to $2200 of vacation pay during her 2 weeks of vacation in the employment year. 

Leaves Of Absence

Paid Leaves of Absence

If an employee takes a leave of absence with pay, they are considered to be still employed. As such, they will earn seniority, vacation pay, and vacation time as normal during their leave. 

Unpaid Leaves of Absence

If an employee takes an unpaid leave of absence, their seniority status will not be affected. That is, the date in which they are eligible for an increase of vacation time and vacation pay due to continued employment does not change.

With that said, the employee will earn less vacation pay since the employee is not earning wages during the leave period. Vacation pay is calculated on earned wages during the year of employment. 

Vacation Timing 

Usually, an employer and employee will come to a mutually agreeable time in which the employee takes a vacation. It is important to communicate with your employees the expectations or notice that you require when it comes to vacation days.

There are also scenarios in which an employer chooses an employee’s vacation period. If this is the case, the employer must provide the employee at least 2 weeks of notice before the employee’s annual vacation.

Renouncement, Interruption, Postponement, and Termination

Here are also several, more specific, scenarios to keep in mind when communicating vacation time with your employees.  

  • Employees are able to renounce or postpone their entitlement to an annual vacation for a specified year of employment via a written agreement with their employer. 
  • Employees are able to interrupt or postpone their annual vacation time to take another leave (maternity, paternity, parental, critical illness, bereavement, sick).
  • In the event of a termination, the employer must pay out for any any owed vacation pay to the employee from the prior completed “year of employment” as well as vacation pay for the partially completed year. 

We Can Help!

Whether it comes to navigating some of the unprecedented scenarios that may come postponing or interrupting vacation days or paying out due to a termination, our Human Experience Experts can help!

If you are running a small business, be it matters relating to compensation, staff relations, or just ensuring compliance with federal and provincial guidelines in all aspects of your business, PaymentEvolution’s HX experts are here to support you in your path to success.