Real Estate

Ways to improve employee motivation for small businesses without spending money

Vacation pay is three weeks for employees who have worked for the same employer for five years.

In Ontario, there are certain employment guidelines regarding vacation leave that provide employees with rights to paid time off. Although there are some categories of work that are exempt, most employers must comply with the Employment Standards Act (ESA) when it comes to granting paid time off.

It is important to note that time off and vacation pay are different from vacation pay and entitlement.

As of January 1, 2018, vacation time and pay place employees into two groups based on the number of years an employee has worked with the same employer. Here are the key differences in minimum vacation time and pay:

  1. Employees who have worked less than five years. earn two weeks of vacation time after each year of 12-month vacation entitlement, calculated by four percent of your gross wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or period of proof (if applicable).
  2. Employees who have worked five years or more earn three weeks of vacation time, calculated at six percent of your gross wages earned in the 12-month entitlement year or voucher period (if applicable).

As an employer, you can provide more rights and benefits to your employees in addition to the minimum standards set by the ESA. However, it cannot be less than the amounts listed above.

10 Vacation Pay Facts for Ontario Business Owners

Here are ten things to keep in mind, in addition to the minimum standards for vacations:

  1. A vacation entitlement year is a recurring 12-month period that can be counted from the employee’s date of hire or, alternatively, throughout the calendar year. If the latter, you must allocate a prorated amount of vacation time for the duration between your employee’s start dates and their calendar year; this is called a “chunk period”.

  2. You are not required to provide vacation time if an employee does not complete a full year to which they are entitled to vacation or a hold period. However, employees earn vacation pay as they earn their wages.

  3. Vacation time is accumulated during a leave of absence, such as Parental or Maternity, since there is no interruption in the employment relationship.

  4. Your employees must take vacations within ten months after the end of one year of vacation entitlement or shelter period.

  5. As an employer, you also have the right to schedule vacations and ensure that your employees take time off before the end of that ten-month period.

  6. Employers must schedule their vacation time in blocks: blocks of two or three weeks, or in one-week blocks of two or three, based on years of service. For shorter periods (ie, one day), your employee can request it, and the agreement can be made in writing or electronically.

  7. In most cases, earned vacation pay must be turned in in a lump sum before your employee takes vacation. However, there are several exceptions to this.

  8. Your employee cannot use all or part of your vacation time; however, as an employer, he is still obligated to provide them with earned vacation pay. In this case, he will need electronic or written consent along with the approval of the Director of Labor Standards.

  9. In cases of termination of employment, you must provide your employee with earned vacation pay. This is required within seven days of termination or on the next payday.

  10. If your employee requests a record of your vacation pay (in writing), you must provide the statement within one week of the request or the next payday.

If you’re still wondering how to calculate vacation pay, or have questions like what to do with vacation for seasonal employees, it’s always a good idea to get help from an HR expert.