Understand the difference between vacation pay vs. vacation time in Canada
Vacation pay is a portion of the employee's earnings that is allocated to them during their year of employment when they are eligible for vacation, while vacation time refers to the actual days or hours they are entitled to take off. Calculating vacation pay involves determining a percentage of the employee's earnings based on their length of service and any specific agreements in place. It is calculated as a percentage of the gross wages earned during the year of employment (continuous employment for the same employer for a period of 12 consecutive months) or another period of 12 consecutive months that your employer determines in accordance with the Canada Labour Standards Regulations.
It is important to note that each province/territory has it's own specific legislation outlining vacation pay requirements. Generally, standard vacation pay calculations are as follows:
- 4% of earnings equal to 2 weeks vacation time
- 6% of earnings equal to 3 weeks of vacation time
- 8% of earnings equal to 4 weeks of vacation time.
Below we've included a chart outlining what qualifies as vacationable earnings. Vacationable earnings are the specific earnings used to calculate an employee's vacation pay, reflecting the compensation they receive for their work.
Click here to access the CRA's Vacation Pay Calculator
Click here to access Canada Labour Standards Regulations
Click here to access the Vacationable Earnings Chart by Province