Bill 148: Vacation Pay

Due to Bill 148, Fair Workplaces, Better Jobs Act, 2017, Ontario’s laws concerning vacation pay changed as of January 1st, 2018. As an employer, you are responsible for ensuring your employees receive time off and vacation pay in accordance with current legislation, meeting at least the minimum standards set out by the Employment Standards Act.

Paid Vacation

Under Bill 148, Ontario increased employees’ vacation leave. Employers must provide three weeks of paid vacation to employees that have worked for the same company for five years. For employees of less than five years, vacation remains at two weeks in a 12-month employment cycle.

A vacation entitlement year is a recurring 12-month period, which begins on your employee’s date of hire. As an employer, you can establish an alternative calendar year. If you do so, your employee is also entitled to a pro-rated amount of vacation time for the period that precedes the alternative vacation cycle. This is called a “stub period”.

Calculating Vacation Pay

The Employment Standards Act calculates pay based on the amount of time your employee has worked for you.

  • For employees with less than five years of employment, vacation pay must be at least 4% of their gross wages earned in the 12-month vacation entitlement year or stub period.
  • Vacation pay for employees with more than five years of employment have increased to 6% of their gross wages in a 12-month or stub period.

Did you know?

Vacation pay is separate from holiday pay and this applies to the amount of time off given to your employees. You can read about holiday pay here.

Do you have questions about vacation pay or creating a vacation policy?

Whether it’s a question about calculating vacation time and pay or developing a vacation policy, our experts are here to support your business. Employer Line’s complimentary helpline is here to have your questions answered right away: 1-888-219-8767.