If you searched for “vacation pay Ontario” rules, the percentage is only the starting point. Ontario law also controls which earnings count, when the rate rises from 4% to 6%, when the money must be paid, and what happens when your job ends. Those details can make a noticeable difference to what you are owed. There is more on this in The Ultimate Guide to Rules of Civil Procedure Ontario.
Short answer: Most employees covered by Ontario’s Employment Standards Act earn at least 4% of gross wages when they have less than five years of employment. The minimum becomes 6% once the five-year threshold applies. The corresponding minimum time off is two weeks and three weeks, respectively. Long-Term Disability Ontario is a useful companion read here.
| Key rule | Ontario ESA minimum |
|---|---|
| Less than 5 years of employment | 4% of qualifying gross wages |
| 5 years or more | 6% of qualifying gross wages |
| Minimum vacation time | 2 weeks, rising to 3 weeks |
| When earnings start accumulating | From the first wages earned |
| Time to take earned vacation | Generally within 10 months after the entitlement year |
| Final unpaid amount | Due within 7 days after employment ends or the next regular payday, whichever is later |
These are statutory minimums. An employment contract or collective agreement can provide a better benefit. Some occupations have special rules or exemptions, and federally regulated employees follow different legislation. Lawverra’s Ontario Employment Standards Act 2026 rights guide explains those broader coverage rules.
Vacation Pay Ontario: How the 4% and 6% Rates Apply
For employees with less than five years of employment, the ESA minimum is 4% of qualifying gross wages earned during the vacation entitlement year or applicable stub period. After five years of employment, the minimum increases to 6%. The Ontario Ministry of Labour’s official ESA vacation guide states both figures: four per cent for those with five years or less of employment, and six per cent for those with five years or more.
Suppose an employee earns $52,000 in qualifying wages during an entitlement year. At 4%, the minimum vacation pay is $2,080. At 6%, the same earnings produce $3,120.
The five-year rule has an important detail that some online summaries miss. If you reach five years of employment partway through a vacation entitlement year, Ontario’s official guide says the 6% rate applies to all qualifying wages earned during that entitlement period.
For example, imagine a calendar-year entitlement period and a fifth anniversary on July 1. If the employee had already received 4% on each paycheque from January through June, the employer must account for the extra 2% on those earlier wages. Ontario’s guide specifically describes this “top-up” requirement.
What Counts as Gross Wages?
The calculation is broader than base salary. Under Ontario’s guidance, qualifying wages include several forms of employment compensation.
- Usually included: regular earnings, commissions, overtime, public holiday pay, termination pay, certain non-discretionary bonuses, room-and-board allowances, and domestic or sexual violence leave pay.
- Not included: the vacation amount itself, tips and gratuities, unrelated discretionary gifts, expense reimbursements, certain benefit-plan payments, Employment Insurance benefits, and severance pay.
This distinction matters for employees who earn commissions, overtime, bonuses, or other variable income. Calculating the statutory percentage based solely on base salary can yield an incorrect result when other qualifying wages have been earned.
Ontario’s ESA places the basic percentage rule in section 35.2. The statute requires at least 4% for employees with fewer than 5 years of employment and at least 6% when the 5-year threshold applies.
Vacation Time and the Payment Are Separate Rights
Vacation time and the money associated with it are related, but they do not accrue in exactly the same way.
An employee earns the monetary entitlement as wages are earned, even during the first year of employment. Ontario’s guide notes that an employee who works only one hour may still earn the applicable statutory percentage on that hour’s wages.
Vacation time is generally earned after an employee completes a vacation entitlement year. Employees with fewer than 5 years of employment receive at least 2 weeks. Those with five years or more of employment receive at least three weeks. Employers generally must ensure that earned vacation time is taken within 10 months of the end of the entitlement year.
That difference is why an employer should not treat unused vacation days and the corresponding monetary amount as the same thing.
When Must Vacation Pay Be Paid?
The default rule is payment in a lump sum before the employee begins a vacation. Ontario law permits other arrangements in specified circumstances.
For example, an employee may agree to receive vacation pay as it accrues on each payday. When that method is used, the amount must be shown separately on the wage statement or on a separate statement provided with it. Ontario law also allows payment at another agreed-upon time in accordance with the current rules.
Employees who want to check the calculation can make a written request for their vacation records. Employers are required to maintain information on vacation time earned and taken, amounts earned and paid, and how the calculation was made. Those records generally must be retained for five years.
What Happens When Employment Ends?
Quitting or being dismissed does not erase an amount that has already been earned.
When employment ends, the employee must receive outstanding amounts from completed periods and the applicable percentage on qualifying wages from the final, partially completed period. The rate depends on whether the employee had reached the five-year threshold before the employment relationship ended.
The statutory percentage is also payable on termination pay, but not on severance pay. Outstanding vacation pay must be paid within 7 days after employment ends or on the next regular payday, whichever is later.
This is one reason a final pay statement deserves careful review. A departing employee may need to check ordinary wages, overtime, the vacation amount, termination pay, commissions, and other compensation separately.
What Can You Do if the Amount Is Missing?
Start with the records. Compare your pay statements with your qualifying gross wages, length of employment, vacation entitlement year, and the percentage your employer used.
Ontario allows employees to file an Employment Standards Act claim when an employer fails to pay required wages, including the statutory vacation amount. In general, a complaint about a violation that occurred more than two years ago falls outside the ESA claim period.
Be careful before choosing between a Ministry claim and court proceedings. The ESA restricts employees from pursuing a civil proceeding over the same unpaid-wage matter after filing a Ministry complaint, subject to a two-week withdrawal rule.
For background on the civil-court route, Lawverra’s Small Claims Court Ontario guide explains the province’s current monetary limit, filing process, and court procedure. The appropriate forum depends on the claim, so legal advice can be useful when dismissal or other compensation is involved.
You can also browse Lawverra’s workplace-rights resources for related Ontario employment and worker-rights topics.
Check the Numbers Before You Assume Your Pay Is Correct
The easiest audit starts with three facts: your vacation entitlement year, your employment anniversary, and your qualifying gross earnings. Then compare those figures with the percentage shown on your pay statements.
The five-year threshold deserves extra attention because Ontario’s top-up rule can change the calculation for the entire entitlement period. If a significant amount is missing or your employment has ended, consider seeking advice before choosing to file a Ministry complaint or a civil claim.
Frequently Asked Questions
Part-time status does not, by itself, remove the entitlement. If the employee is covered by the ESA, the applicable percentage is based on the employee’s qualifying wages. Ontario’s own vacation guide uses a part-time worker in one of its examples for the 6% calculation.
Regular earnings include commissions when determining qualifying gross wages under the ESA. Overtime and public holiday earnings can also count.
Yes, when the ESA requirements are met. The employee must agree to that method, and the amount paid must be identified separately on the wage statement or accompanying statement.
Employers have rules and responsibilities concerning when vacation time must be scheduled. The statutory monetary entitlement is separate, and the ESA does not permit an employer to simply eliminate earned minimum compensation because the vacation time was not taken.
Yes. Earned amounts that remain unpaid are due upon termination of employment. The ESA also requires the applicable percentage to be applied to termination pay, while statutory severance pay is excluded from the calculation.
