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In Canada, it’s common to think of Vacation Time and Vacation Pay as the same thing. However, legally, they are two separate requirements. Each province and territory has its own specific rules for how much time off an employee gets and how much pay they must receive.
Employment Hero is built to handle this complexity for you, ensuring your team stays compliant with Canadian payroll laws.
- The Difference: Understanding Vacation Time vs. Vacation Pay.
- Rules by Region: A breakdown of requirements across Canada.
- How Employment Hero Helps You Meet Requirements
Getting started
Vacation time allows employees to take a break from work. Vacation pay is the compensation (usually a percentage of earnings) that finances that time off.
Vacation Time (The Days Off)
- Mandatory for all non-exempt employees in Canada.
- Accumulated based on calendar time (e.g., 1 year of work = 2 weeks off).
Vacation Time Exemptions
Some jurisdictions (ON, NS, SK, etc.) allow employees to waive their right to time off under specific circumstances. Consult your local Employment Standards Office before agreeing to exemptions.
Vacation Pay (The Money)
- Earned on top of regular wages/salary.
- Calculated as a percentage of "vacationable" earnings.
- Example: $1,000 earned @ 4% = $40 in accumulated vacation pay.
Every province and territory has unique legislation regarding minimum entitlements.
View our guide: Vacation pay requirements by province
Important Note
Based on December 2023 legislation from the National Payroll Institute. Requirements are subject to change.
Use the Time Off Module to manage days and the Payroll Module to automate the financial payouts.
These can be configured to manage the legal minimum requirements or to manage a “greater right or benefit” policy that an employer has implemented.
Understanding “Greater Right or Benefit”
As an employer, you are required to provide your employees with legislated minimum vacation time and pay for the province in which they are employed.
Many employers choose to establish a vacation policy that exceeds the legislated minimum. This is known as providing a “greater right or benefit” to the employee.
If a company chooses to do this, they are bound to that policy by employment standards.
New to Time Off?
Check out our Time Off Module Overview for detailed setup steps.