Understanding Canada vacation pay

In Canada, vacation pay is governed at both the federal and provincial level. Laws and regulations may vary from province to province, but the general principles of vacation pay remain similar across the country.

Rules and Regulations:

• Minimum Vacation Time
  • Each province has a set standard regarding the minimum amount of vacation time each worker is entitled to. In most provinces, the mandate is a minimum of two weeks vacation after one year of employment, which increases with the length of employment, but will vary depending on province.
• Vacation Pay Rate
  • Vacation pay is typically calculated as a percentage of gross earnings. The country standard is 4% for the first five years of employment, increasing to 6% for employees with more than 5 years of employment with the same company. This rate may vary, depending on which province work is being performed in.

It is the employer’s responsibility to ensure all workers are taking the appropriate amount of time off and if not, are compensated appropriately. For more information on provincial regulations on vacation pay and time off, please contact the provincial tax agency directly.

Lastly, in order to properly calculate vacation pay, it will be the employer’s responsibility to provide the appropriate vacation time allotment and vacation rate for each worker, but assuming all information has been provided, Salsa will take care of the rest! For more information on how to set up a Vacation Pay policy for an employer, please check out our Help Center article here!