Vacation Pay Versus Vacation Time: What’s the Difference? 

Often, both employees and employers mistakenly interchange the terms vacation pay and vacation time. However, these are two distinct concepts under the Employment Standards Act, 2000, S.O. 2000, c. 41 with significant differences. Understanding these differences is crucial to understanding one’s responsibilities and entitlements.

If you were denied these absences by your employer, an employment lawyer can help you get the benefits you are owed. Reach our for a employment lawyer Toronto free consultation to learn more.

Vacation Time

Vacation time is the more intuitive concept. Under the Employment Standards Act, 2000, employees are entitled to a minimum amount of time off. For new employees, this time is earned after one year of service. 

Though employers may be permitted to determine when an employee can take time off, they are obligated to provide this time. Under the Employment Standards Act, 2000, employees are entitled to a minimum of 2 weeks of vacation time if they served between 1-5 years and 3 weeks if they served longer than 5 years. Notably, even if an employee is on leave, they may still be accruing vacation time. 

Vacation Pay

Vacation pay, unlike vacation time, begins accumulating as the employment relationship begins. Employers are generally required to pay vacation pay in a lump sum prior to an employee’s time off (which time off is then unpaid). 

An employee may agree to receive vacation pay on every pay cheque. If both the employee and employer are agreeable to this arrangement, the portion of vacation pay should be clearly labeled on the paystub. 

How Much Is Vacation Pay

Vacation pay is a minimum of 4% of an employee’s wages. This means that employees with under 5 years of service are entitled to a minimum of 4% of their compensation for vacation pay. Those with longer than 5 years of service are entitled to a minimum of 6% for vacation pay.

Vacation pay is calculated on an employee’s total wages, which may include bonuses, commissions, and overtime. Often, employers who provide vacation pay only consider the employee’s base pay. However, elements such as commissions can constitute a significant part of an individual’s wages. An employee may be entitled to vacation pay on any portion of their wages that was not included, even going back to the start of the employment relationship.

What happens if my employer hasn’t compensated me for my vacation pay? 

If you’re entitled to vacation pay and feel that it has been unfairly denied, you can contact the Ministry of Labour or seek legal advice through an employment lawyer Toronto.  

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