How is vacation pay calculated in Ontario?
Vacation pay in Ontario is calculated as 4% (or 6% at five years of employment) of all the wages earned in the 12-month vacation entitlement year, not counting vacation pay itself.[on_vac] The percentage is decided by the employee's period of employment when the vacation year ends: someone who reaches five years at any point in the year gets 6% on all of that year's wages.
Worked example. A full-time employee at the Ontario minimum wage of $17.95 earns about $37,336 in a year; 4% vacation pay is $1,493.44. After five years the same wages earn $2,240.16.
| Gross wages in the year | 4% (under 5 years) | 6% (5 years or more) |
|---|---|---|
| $30,000 | $1,200.00 | $1,800.00 |
| $45,000 | $1,800.00 | $2,700.00 |
| $60,000 | $2,400.00 | $3,600.00 |
| $80,000 | $3,200.00 | $4,800.00 |
| $100,000 | $4,000.00 | $6,000.00 |
What counts toward vacation pay
Vacation pay is calculated on regular earnings and most other pay for work, and not on discretionary or non-work payments.[on_vac]
| Included | Not included |
|---|---|
| Regular earnings, including commissions | Vacation pay itself |
| Non-discretionary bonuses tied to hours, production or efficiency | Tips and other gratuities |
| Overtime pay and public holiday pay | Discretionary bonuses and gifts (e.g. a Christmas bonus not tied to performance) |
| Termination pay | Expenses, travel and living allowances |
| Room and board allowances | Benefit plan contributions and payments (e.g. sick pay); Employment Insurance |
| Domestic or sexual violence leave pay | Severance pay |
Enter any excluded amounts that are inside your gross figure in the second box of the calculator and it takes them out first.
Vacation time: two or three weeks
Employees earn two weeks of vacation after each 12-month vacation entitlement year, and three weeks once their period of employment reaches five years.[on_vac] The employer schedules it within 10 months after the year ends, in a block of two weeks (or two one-week blocks) or three weeks. Vacation pay is usually paid as a lump sum before the vacation, but it can be paid on each paycheque if the employee agrees, and the pay stub must then show it.
Vacation pay when you quit or are let go
When employment ends, the employer must pay all vacation pay not yet paid, including 4% or 6% of wages earned in the unfinished vacation year, within seven days or on the next regular payday, whichever is later.[on_vac] Vacation pay is owed on termination pay but not on severance pay. To calculate those, use the severance pay Ontario calculator, which also gives the weeks of notice. Overtime earned during the year counts toward vacation pay; see the overtime calculator for Ontario, and the minimum wage in Ontario for the base rate.
Common vacation pay mistakes
- Calculating 4% on base salary only and leaving out overtime, commissions or public holiday pay.
- Staying at 4% after the employee passes the five-year mark during the year: the whole year moves to 6%.
- Treating "vacation pay on each cheque" as permission to give no time off. Time off is a separate right.
- Adding vacation pay to the severance pay base.
Frequently asked questions
Is vacation pay 4% of gross pay in Ontario?
Yes, at least 4% of gross wages (excluding vacation pay) for employees with under five years of employment, and 6% from five years.
How do I calculate 4% vacation pay?
Multiply the wages that count by 0.04. $1,436 gross on a paycheque × 0.04 = $57.44 vacation pay.
Do you get vacation pay when you quit in Ontario?
Yes. All unpaid vacation pay, including 4% or 6% of wages in the current year, is due within seven days or by the next payday.
Is vacation pay paid on overtime?
Yes. Overtime pay, public holiday pay and termination pay count toward vacation pay in Ontario.