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Ontario vacation pay

Ontario runs vacation on a percentage, not on an average. Four per cent of what you earned in the entitlement year if you have less than five years with the employer when that year ends, six per cent if you have reached five. The percentage is the easy half — the half people get wrong is which earnings it applies to.

Last reviewed · maintained by Ihor Bezrukavnyk · how we calculate

Work out your vacation pay

Enter what you earned across the vacation entitlement year, then pick your side of the five-year line.

$

Gross, before deductions. Include overtime and public holiday pay; leave last year's vacation pay out. what counts as wages →

time with this employer

rate 4% · 2 weeks of vacation time

$31,200.00 × 4% = $1,248.00

vacation pay$1,248.00

The five-year step is a cliff, not a slope, and the Ministry applies it when the vacation entitlement year (or stub period) ends: if your period of employment has reached five years by then, 6% applies to all the wages earned in that year, including those from before the anniversary. There is no tier in between.

Which earnings the percentage applies to

The Act applies the percentage to “the wages, excluding vacation pay, that the employee earned during the period for which the vacation is given”, and defines wages broadly. Here is what that works out to:

In the base

  • Regular earningsHourly pay, salary and commissions
  • Overtime payYes — all of it, at the premium rate you were paid
  • Public holiday payA payment required under the Act, so it is wages
  • Non-discretionary bonusesAnything tied to hours, production or efficiency
  • Room and board allowancesWhere the contract or a regulation provides them
  • Termination payAlso a payment required under the Act

Out of the base

  • Last year's vacation payExcluded by section 35.2 in so many words
  • Tips and gratuitiesOutside the definition of wages entirely
  • Discretionary bonusesOnly where they are both discretionary and unrelated to hours, production or efficiency
  • Expenses and travel allowancesReimbursement is not remuneration
  • Benefit plan contributionsWhat the employer puts in, and what the plan pays out
  • Severance payExcluded by the Ministry's reading — see the note below

Here is the trap worth knowing. Overtime pay is inside the vacation base — but it is expressly outside the base for public holiday pay, which averages your wages with overtime stripped out. Same province, same paycheque, opposite treatment. A calculator that uses one rule for both gets one of them wrong every time.

On severance pay, be careful with anyone who states it flatly. Severance is a payment required under the Act, which on the plain words of the definition makes it wages. The Ministry's guidance nonetheless lists it as excluded while listing termination pay as included. We follow the Ministry, because that is what an inspector will apply — but it is an interpretation, not a line you will find in the statute.

Vacation time, which is a separate entitlement

Two weeks of vacation time for a period of employment under five years, three weeks at five years or more. The time and the pay step up together, but they are separate obligations — an employer owes you both, and paying the percentage does not discharge the duty to give you the time off.

The entitlement year is normally the twelve months running from your first day. An employer may instead set an alternative year starting on a date of its choosing, which leaves a short “stub period” in between; vacation time for a stub period is prorated, while vacation pay stays at the flat percentage of whatever you actually earned in it.

The default is a lump sum, before the vacation starts. Two practical exceptions follow: where you are paid by direct deposit, or you are not taking vacation in whole weeks, it can come on the pay day for the period the vacation falls in.

Vacation pay on every cheque, as it accrues, is allowed if you agreed to it (in writing or electronically), and the amount has to be shown separately on the wage statement or on a statement of its own (s. 36 (3)). Since 21 June 2024 the Act also lets vacation pay be paid at a time set out in an agreement you made with the employer (s. 36 (4)). However and whenever it is paid out, the employer still owes you the vacation time.

When employment ends, accrued vacation pay is owed and payable on the later of seven days after the end and what would have been the next pay day.

Who is outside Part XI

The vacation provisions do not reach everyone. Listed professionals and their students — architecture, law, professional engineering, public accounting, surveying, veterinary science, teachers, and ten listed health professions (chiropody, chiropractic, dentistry, massage therapy, medicine, optometry, pharmacy, physiotherapy, psychology and naturopathy) — are outside Part XI altogether, as are commercial fishers, real estate salespeople, and commission salespeople who normally sell away from the employer's premises. Farm employees in listed primary production are also outside it, and fruit, vegetable and tobacco harvesters come inside only after thirteen weeks with the employer.

The rest of the Ontario picture

Vacation is one of four Ontario numbers worth keeping straight, and they use different wage bases:

Questions people actually ask

How do I calculate 4% vacation pay in Ontario?

Add up the gross wages you earned during the vacation entitlement year — regular pay, overtime pay, public holiday pay, commissions and non-discretionary bonuses — leave out last year's vacation pay, and take four per cent of the total. On $52,000 of earnings that is $2,080. From five years of service the rate becomes six per cent, which on the same earnings is $3,120.

Does overtime pay count toward vacation pay in Ontario?

Yes. Overtime pay is wages under the Act, and nothing in the vacation provisions takes it out of the base, so the percentage applies to it in full. Note that public holiday pay works the opposite way — that formula expressly strips overtime out before averaging. The two rules genuinely differ, and mixing them up is the most common mistake on an Ontario stub.

When does vacation pay go from 4% to 6% in Ontario?

When your period of employment with that employer has reached five years by the end of the vacation entitlement year (or stub period). It is a step, not a gradual accrual: if you reach five years partway through the year, six per cent applies to all the wages earned in that year, including those from before your anniversary, with nothing in between. Both active and inactive employment count toward the five years.

Can my employer pay vacation pay on every pay cheque?

Only if you agreed to it in writing and the vacation pay appears separately from your other wages, either on the wage statement itself or on a separate statement given at the same time. If either condition is missing, the arrangement does not satisfy the Act. And however it is paid, you are still entitled to the vacation time.

Do I get vacation pay when I quit or am let go?

Yes. Accrued vacation pay is owed when employment ends, whoever ended it. It has to be paid on the later of seven days after the employment ends and the day that would have been your next pay day.

Are tips included in vacation pay?

No. Tips and other gratuities sit outside the definition of wages in the Act, so the percentage does not apply to them. The same is true of expense reimbursements and travel allowances, and of bonuses that are both purely discretionary and unrelated to hours, production or efficiency — a bonus tied to any of those three stays in the base.

sources

Every figure on this page traces to the statute or agency page above. If one is out of date, tell us — corrections ship the same week.

Overtally computes what you should be paid before taxes. It does not calculate take-home pay, withholding or deductions, and it is not legal advice — it is your own record and your own estimate.