Ontario Vacation Pay: Your Rights, Your Paycheque

Published on
March 2, 2026

Vacation pay is money your employer must pay you for time off work. In Ontario, vacation pay is mandatory under the Employment Standards Act (ESA). Every employee earns vacation pay from their first day of employment, regardless of whether they actually take vacation time.

Understanding your vacation entitlements is essential for every Ontario employee. Whether you’re wondering how much vacation pay you’re owed, how to calculate it, or what happens to unused vacation time, this guide covers everything you need to know about vacation pay in Ontario.

How Much Vacation Pay in Ontario?

Standard Vacation Entitlement

Ontario law requires minimum vacation entitlements based on length of service:

Less than 5 years of service:

2 weeks of vacation time
4% vacation pay

5 or more years of service:

3 weeks of vacation time
6% vacation pay

These are minimums. Your employer can offer more generous vacation policies, but cannot provide less than the ESA requires.

Vacation Pay After 10 Years Ontario

After 10 years with the same employer, you’re still entitled to the standard 3 weeks vacation and 6% vacation pay under the ESA. However, many employers offer additional vacation time (4+ weeks) for long-service employees as company policy.

How Many Weeks Vacation After 15 or 20 Years?

The ESA doesn’t increase vacation entitlement beyond 5 years of service. However:

Many employers provide 4 weeks after 10-15 years
Some offer 5 weeks after 20+ years
This depends on your employment contract or company policy

Check your employment agreement for vacation entitlements beyond the statutory minimum.

How Does Vacation Pay Work?

Vacation pay is calculated as a percentage of your gross earnings. You earn vacation pay on:

Regular wages and salary
Overtime pay
Commissions and bonuses
Public holiday pay
Termination pay

You do NOT earn vacation pay on vacation pay itself.

Vacation Pay Calculator Ontario

How to Calculate Vacation Pay

For employees with less than 5 years: Total gross earnings × 4% = Vacation pay owed

Example: If you earned $50,000 this year: $50,000 × 0.04 = $2,000 vacation pay

For employees with 5+ years: Total gross earnings × 6% = Vacation pay owed

Example: If you earned $50,000 this year: $50,000 × 0.06 = $3,000 vacation pay

Vacation Pay Percentage Ontario

4% vacation pay = 2 weeks vacation (less than 5 years)
6% vacation pay = 3 weeks vacation (5+ years)

Vacation Pay Percentage Ontario

Your employer can pay vacation pay either:

On each paycheque (showing as a separate line item)
As a lump sum before you take vacation
As a lump sum on a specific date each year

Paid Vacation Ontario: When Can You Take Time Off?

Vacation Time Entitlement

You earn vacation time based on each 12-month period (vacation year). However, the timing of when you can actually take your vacation depends on:

Your employer’s vacation policy
Operational requirements
Reasonable notice to your employer

Employers can determine when vacation is taken, but must provide reasonable notice and cannot interfere with your entitlement.

Vacation Days Ontario

2 weeks = 10 vacation days (for employees working 5-day weeks) 3 weeks = 15 vacation days

Part-time employees earn vacation pay on the same percentage basis but may have fewer actual days off depending on their schedule.

Use It or Lose It Vacation Policy Ontario

“Use it or lose it” vacation policies are illegal in Ontario. Your employer cannot force you to forfeit earned vacation time or vacation pay.

However, employers can:

Require you to take vacation within a certain timeframe
Set rules about when vacation can be scheduled
Limit how much vacation can be carried forward to the next year (with reasonable policies)

If your employer has a “use it or lose it” policy, they’re violating the ESA.

Unused Vacation Pay Ontario

What Happens to Unused Vacation?

If you don’t take your vacation time, you’re still entitled to the vacation pay. When your employment ends, your employer must pay out:

All accrued vacation pay
Any unused vacation time you’ve earned

This vacation payout must appear on your final pay or Record of Employment.

Employer Not Paying Vacation Pay

If your employer isn’t paying vacation pay, this is a violation of the Employment Standards Act. You can:

Raise the issue with your employer first
File a claim with the Ministry of Labour within 2 years
Consult an employment lawyer if significant amounts are owed

Employers cannot withhold vacation pay, even if you’re terminated for cause.

Vacation Pay When You Leave a Job

When your employment ends (whether you quit, are fired, or laid off), you must receive:

Vacation pay earned but not yet paid
Pay for any vacation time earned but not taken

Example: You have 5 days of unused vacation and haven’t been paid vacation pay on your last $10,000 of earnings:

5 days × daily rate = unused vacation time payout
$10,000 × 4% (or 6%) = $400 (or $600) vacation pay owed

Both must be paid on your final pay.

Vacation Pay ESA Requirements

The Employment Standards Act sets clear rules:

➜ Vacation pay is mandatory for all employees
➜ Minimum 2 weeks/4% for first 5 years
➜ Minimum 3 weeks/6% after 5 years
➜ Must be paid out when employment ends
➜ Cannot be forfeited or taken away
➜ Employers must track and maintain records

Employers who violate vacation pay rules can face penalties and orders to pay employees what they’re owed, plus interest.

Vacation Pay on Termination or Severance

If you’re terminated and receive severance or pay in lieu of notice, you should also receive vacation pay calculated on that severance amount.

Example: Your severance is $20,000

You’re entitled to 4% vacation pay on that severance
Total vacation pay on severance: $800

Many employers forget to include this, so verify your final pay includes vacation pay on all amounts owed.

Common Vacation Pay Mistakes Employers Make

Not Paying Vacation Pay on Bonuses

Employees earn vacation pay on commission and bonuses. If your employer pays you a $5,000 bonus, you should also receive 4% or 6% vacation pay on that amount.

Incorrect Percentage After 5 Years

Some employers continue paying 4% vacation pay even after an employee has been there for 5+ years. After 5 years, you’re entitled to 6%.

Not Paying Out Upon Termination

All vacation pay must be paid when employment ends. Employers cannot refuse to pay accrued vacation, even if you were fired.

Forcing Forfeiture

Policies that force employees to lose unused vacation violate the ESA. Vacation time and pay cannot be forfeited.

Special Situations

Part-Time Employees

Part-time workers earn vacation pay on the same percentage basis as full-time employees. If you work 20 hours per week and earn $20,000 annually:

You’re entitled to 4% vacation pay = $800
Your vacation time is still 2 weeks (proportional to your schedule)

Contract Workers

Contract employees are entitled to vacation pay unless they’re truly independent contractors. If you’re an employee (even on contract), vacation pay is mandatory.

Commission-Based Employees

Sales and commission workers earn vacation pay calculated on their total earnings, including commissions. Your employer cannot exclude commissions from vacation pay calculations.