The Employment Standards Act (“ESA”) is the legislation that governs vacation entitlements in Ontario. An employee and employer may agree to additional vacation entitlements in the employment contract, but an employer cannot contract out of the minimum entitlements provided for under the ESA.
Most employees with less than five years of employment are entitled to a minimum of two weeks of vacation time after each 12-month vacation entitlement year, whereas most employees with five or more years of employment are entitled to three weeks. Typically, a vacation entitlement year is a recurring 12-month period beginning on the date of hire, but an employer can establish an alternative vacation entitlement year.
Employees must receive a minimum of either four percent or six percent of the gross wages earned during the 12-month vacation entitlement year as vacation pay. An employee whose period of employment is less than five years upon completion of a vacation entitlement year is entitled to vacation pay calculated as four percent of all gross wages earned in the vacation entitlement year. An employee whose period of employment is five years or more upon completion of a vacation entitlement year is entitled to vacation pay calculated as six percent of all gross wages earned during the vacation entitlement year.
I Quit my Job, Am I Still Entitled to Vacation Pay?
If an employee resigns or is dismissed from their job, this does not exempt an employer from paying vacation pay to the employee. The amount owed is based on wages earned up until the end of the minimum period of notice of termination as required by the ESA. Vacation pay is payable on termination and must be paid within seven days of the employment ending or on what would have been the employee’s next payday, whichever is later.
Whether an employee resigns or is terminated, an employee is entitled to vacation pay that they have earned and that has not yet been paid. An employee fired during a vacation entitlement period and before the five-year employment threshold will be entitled on termination to vacation pay equal to four percent of the wages earned during the last (partially completed) vacation entitlement period (plus any outstanding vacation pay earned in previously completed vacation entitlement periods); whereas an employee who surpasses the five-year employment threshold will be entitled to six percent of wages earned during the last (partially completed) vacation entitlement period.
It is important that both employees and employers make themselves aware of their respective rights and obligations regarding vacation entitlements. For an employee, this knowledge can help them enforce their rights and ensure they are getting the full vacation time and pay that they are entitled to. For employers, this knowledge will allow for the implementation of proper vacation policies and will help companies avoid unnecessary complaints.
Return to Blog