What is the difference between vacation time and vacation pay??
1. The Employment Standards Act:
Section 15.1(1) of the Employment Standards Act defines and sets out vacation time and vacation pay.
2. 12-Month Vacation Entitlement Year:
A 12-month vacation entitlement year is the 12-month period beginning on the date that you were hired.
For example, if you were hired on November 1, 2017, that 12-month vacation period would end on October 31, 2018.
3. Vacation Time:
Vacation time refers to the number of paid weeks that salaried employees are entitled to take each entitlement year. The number of weeks that an employee can take off is dependent on the number of years that they have worked for his/her employer.
Employees who have worked for their employer for less than five (5) years are entitled to two (2) weeks of vacation each entitlement year.
Employees who have worked for their employer for five (5) years or more are entitled to three (3) weeks of vacation each entitlement year.
4. Vacation Pay:
If you are paid by the hour in Ontario, vacation pay refers to a percentage of your gross wages that may be banked or paid out to the employee, each pay period. The percentage paid to the employee is determined by the number of years that the employee has worked for his/her employer.
For employees that have worked for their employer for less than five (5) years, vacation pay must be at least four percent (4%) of their gross wages earned during the entitlement year.
For employees that have worked for their employer for five (5) years or more, vacation pay must be at least six percent (6%) of their gross wages earned during the entitlement year.
5. Example Vacation Pay:
Andrew started working as an Electrical Engineer at Engineering Inc. on September 1, 2014. His position is salaried.
Andrew’s standard vacation time runs from September 1 to August 31 each year. In his first entitlement year, Andrew is entitled to two (2) weeks of vacation.
Andrew is entitled to two (2) weeks of vacation for the following entitlement years:
i) September 1, 2015 to August 31, 2016;
ii) September 1, 2016 to August 31, 2017;
iii) September 1, 2017 to August 31, 2018; and
iv) September 1, 2017 to August 31, 2019.
On August 31, 2019, Andrew will have completed five years of employment at Engineering Inc. and will be entitled to take three weeks of vacation each entitlement year thereafter.
6. Example: Vacation Time:
Jody works part-time as a Barista at Starbucks Canada. Jody started working at Starbucks in 2017, and she is paid $14.00 per hour.
In her first vacation entitlement year, Jody earned gross wages of $30,000. Jody was therefore entitled to $1,200.00 in vacation pay (4% of her gross wages).
7. Suzanne Desrosiers Professional Corporation:
For assistance in updating your employment policies and procedures and/or providing training to staff members, please contact Suzanne Desrosiers today, at email@example.com or (705) 268-6492.