Ontario Vacation Pay Calculator

The rate, and what happens when you cross five years

Section 35.2 pays 4% of the wages earned in the period the vacation is given for if your period of employment is under five years, and 6% at five years or more. Section 33(1) moves the time entitlement at the same point: two weeks becomes three.

If you cross the five-year mark during a vacation entitlement year, the 6% applies to all the wages in that year — not only the portion earned after the anniversary.

"Period of employment" is the operative trigger for both, and notably it is not defined in s. 1(1). The Ministry treats it as total elapsed time since hire, including inactive periods — a reading supported by ss. 33(2) and 34(4), which both say active and inactive employment count.

What counts as wages in Ontario

Section 35.2 applies the percentage to "the wages, excluding vacation pay". The s. 1(1) definition then does the rest of the work.

Counted: regular earnings, commissions, overtime pay, public holiday pay, termination pay, allowances for room and board, and bonuses or gifts that are non-discretionary or tied to hours, production or efficiency.

Not counted: vacation pay already paid or accrued, tips and gratuities (s. 1(1)(d)), discretionary bonuses and gifts unrelated to work (s. 1(1)(e)), expenses and travel allowances, and benefit-plan contributions or payments.

Do not use the s. 1(1) definition of "regular wages" for this. That is a separate, much narrower term used elsewhere in the Act, and it strips out overtime, holiday pay, premium pay and termination pay — everything that makes the vacation base larger.

The stub period: time is pro-rated, pay is not

Employers may set an "alternative vacation entitlement year" on a common date rather than each employee's hire anniversary. The gap between your hire date and the start of that year is a stub period, and it is the single most misunderstood mechanic in Ontario vacation law.

Section 34(2) pro-rates the vacation time for a stub period: two weeks multiplied by the ratio of the stub period to twelve months, or three weeks at five years or more.

There is no equivalent pro-ration for vacation pay. Section 35.2 simply applies 4% or 6% to the wages earned in the period, whatever its length. A short stub period reduces your days off; it does not reduce the percentage on the money you earned.

When it must be taken, and when it must be paid

The employer schedules vacation under s. 35, and it must be completed no later than ten months after the end of the entitlement year it relates to. Under five years it must be given as a two-week block or two one-week blocks; at five years or more, three weeks, or two plus one, or three separate weeks. Only you can request shorter periods, in writing, and the employer must agree.

Vacation pay is a lump sum before the vacation begins (s. 36(1)), with exceptions for direct deposit, accrual each pay period where it is shown separately on your wage statement, and — since June 2024 — any time set out in an agreement you have made with your employer under s. 36(4).

You cannot simply agree to skip your vacation. Section 41 requires both employer agreement and the approval of the Director of Employment Standards, and s. 41(2) is explicit that nothing there lets an employer avoid paying the vacation pay.

On termination, accrued vacation pay is due under s. 38 within the later of seven days or your next regular payday. Section 40 deems it held in trust and makes it a lien on the employer's assets, and directors are personally liable for up to twelve months' worth under s. 81(7).