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  • December 16, 2021
  • 4 min read
There are ways to increase employee motivation in small businesses without spending money

Vacation pay is for employees who have been employed by the same employer for at least five years. It lasts for three weeks.

Ontario has specific employment guidelines that provide vacation leave rights for employees. These guidelines include time off with pay. While there are certain job categories that are exempt from the Employment Standards Act (ESA), most employers must follow it when providing time off with paid.

It is important to remember that vacation pay and vacation time are different from holiday entitlement and pay. Beginning January 1, 2018, vacation pay and leave are divided into two categories based on how long an employee has been with the same employer. These are the main differences in vacation time and pay.

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  1. Employees with less than five years of experience get two weeks vacation after each 12-month vacation entitlement period. This is calculated at four percent of their gross earnings (excluding any vacation pay), and is rounded to the nearest quarter of their gross wages.
  2. Employees with five years of experience earn three weeks vacation time. This is calculated using six percent of their gross earnings for the 12-month entitlement or stub period, if any.

Employers have the right to offer more benefits and rights than the ESA minimum standards. It cannot be lower than the listed amounts.

10 Vacation Pay Facts For Ontario Business Owners

These are 10 things you should know, in addition to the minimum standards required for vacation leave.

  1. An employee’s vacation entitlement year is a 12-month recurring period that can start at the employee’s hiring date or continue throughout the calendar year. If the former, you will need to allocate vacation time pro-rated for the period between the employee’s start date and the end of the calendar year. This is known as a “stub” period.
  2. If an employee doesn’t complete their vacation entitlement year, or stub period, you are not required to give vacation time. Employees do get vacation pay when they earn their wages.
  3. Because there is no break in the employment relationship, vacation time can be accumulated during a leave such as Parental or Maternity.
  4. Employees must take vacation within ten month of completing a vacation entitlement period or stub period.
  5. Employers also have the right of vacation scheduling. You must ensure that employees are able to take time off during the ten-month period.
  6. Employers are required to schedule vacation time in blocks. These blocks can be two- or three-week long, or one-week blocks of two- or three depending on the years of service. You can take shorter vacations (e.g. Your employee can request that you do this for shorter periods of time (e.g., one day). The agreement can be in writing or electronically.
  7. In most cases, earned vacation payments must be paid in one lump sum prior to the employee taking vacation. There are exceptions to this rule.
  8. Although your employee may not be able to use all of their vacation time, you as an employer are still required to pay them their earned vacation money. You will need to obtain an electronic or written consent and approval from the Director for Employment Standards in this instance.
  9. You must give your employee the earned vacation pay in case of termination. This must be provided within 7 days of termination or the next payday.
  10. You must give your employee a written record of vacation pay if they ask for it. The statement must be provided within one week or the next payday.

It’s always a good idea for you to seek out help from an attorney if you have questions about how to calculate vacation payments or how to make vacation leave available to seasonal employees. Expert in HR .

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