VACATION PAY
Welcome to another MOL podcast.
In today's employment standards segment we will be focusing on vacation pay. We discussed vacation time in a previous podcast. You can access that podcast, and any of our previous podcasts on the Ministry of Labour's website, on iTunes and on You Tube.
If you are covered by the Employment Standards Act, you are entitled to a minimum of two week's vacation time every 12 months.
Now, ordinarily, the 12 month period would begin on your date of hire. However, some employers set a vacation entitlement year that may not coincide with your date of hire. Should this be the case, your vacation pay would be calculated on a pro-rated basis. This period of time between the date you began to work and the beginning of the vacation entitlement year at your workplace, is sometimes called the "stub period".
Your vacation pay must be at least four per cent of the "gross" wages earned in the 12-month vacation entitlement year or stub period - this excludes any vacation pay. If your contract or collective agreement provides a better vacation benefit than the minimum required, you may be entitled to a higher percentage of your gross earnings for vacation pay.
For example, depending on your circumstances at work, you may be entitled three weeks' vacation, with six per cent of gross earnings for vacation pay, or more.
In calculating your vacation pay, your employer must include as "gross' wages:
• Your regular earnings, including commissions;
• bonuses and gifts that are non-discretionary or are related to hours of work;
• overtime pay;
• public holiday pay;
• termination pay; and
• allowances for room and board.
Your employer does not include vacation pay paid out or earned but not yet paid.
Your employer does not include tips and gratuities or discretionary bonuses and gifts that are not related to hours of work, production or efficiency (for example, a Christmas or seasonal bonus unrelated to performance).
Expenses and traveling allowances are not included as gross wages for the purpose of calculating vacation pay. Neither are living allowances or any contributions made by your employer to a benefit plan and payments from a benefit plan - such as sick pay - that you may be entitled to.
Federal employment insurance benefits and severance pay are also not included in calculating vacation pay owing.
In most cases, the vacation pay must be paid in a lump sum sometime before you take the vacation time earned. There are four exceptions:
First, if you take your vacation time in periods of less than one week.
• In this case, you must be paid vacation pay on or before the payday for the period in which your vacation falls.
You may have agreed, in writing, that vacation pay will be paid on each pay cheque.
• In this case, your wage statement must show clearly the amount of the vacation pay being paid. This amount must also be shown separately from any other amounts paid.
If you agree in writing, your employer can pay the vacation pay at a time agreed to by you.
If your employer pays your wages by direct deposit into an account at a financial institution, you must receive your vacation pay on or before the payday for the period in which the vacation falls.
If your employment should end - for example you quit your job or your employment is terminated - you are entitled to the vacation pay that you have earned and that has not yet been paid out. The unpaid vacation pay must be paid either within seven days of your employment ending or on what would have been your next pay day, whichever is later.
These are just some of the general rules regarding vacation pay.
For more detailed information on vacation time and vacation pay, please go to our website … Ontario.ca - forward slash - employment standards - one word.
That's Ontario.ca - forward slash - employment standards - one word.
Go to the topics column, and click on Vacation Pay.
Or, you may call our Information Centre at 1-800-531-5551.
That's 1-800-531-5551.
Thank you for listening.