Summer is finally here! If you are like most workers, you have planned to take vacation during the summer months of June, July and/or August. According to Gallup, July is the most popular month for vacation followed by August and June.

Many common myths persist about vacation and what employees and employers can and cannot do. This article sheds light on 7 common misconceptions so you can properly plan and manage your time away from work. *


  1. Vacation has two parts: time and pay

Under Ontario’s Employment Standards Act, vacation is made up of two entitlements: time and pay.

All employees are entitled to a minimum of 2-weeks of vacation time and a minimum of 4% vacation pay. However, if an employee has 5 or more years of continuous service to an employer (including approved leaves like pregnancy and parental leave) the employee is entitled to 3-weeks of vacation time each year and 6% vacation pay.

Vacation time and pay are accrued (i.e. earned) on a rolling basis during the vacation entitlement year. A vacation entitlement year is a 12-month period when the vacation year starts and ends. For some workplaces, the vacation entitlement year and the calendar year (i.e. January 1 to December 31) are the same. However, in other workplaces, the vacation entitlement year covers a different 12-month period of time (e.g. a company’s fiscal year).


  1. An employee may be required to work for a full vacation entitlement year before taking vacation time

Under the Employment Standards Act, an employee may be required to work for a full vacation entitlement year before they can take vacation time. Practically what this means is that it would be completely legal for an employee to work for 12 full-months without any time away from work (other than approved leaves of absences and statutory holidays).

Most employers are more generous and allow their employees to take vacation during the vacation entitlement year when it is earned. This can be done in one of two ways:

  • Allow employees to use only their earned days within the year. For example, if a full-time employee earns 2-weeks of vacation each calendar year (0.83 days per month) and the employee wants to take vacation in May, the employer will allow the employee to take up to 4-days off in May because the employee has banked 4 days from January to May (0.83 days multiplied by 5 months)
  • Allow the employee to use their annual vacation at any time. If the employee resigns or loses his/her job before the end of the vacation entitlement year, the employee will be required to repay any unearned time and pay. For example, if a full-time employee is entitled to 2-weeks of vacation each calendar year, takes the full 2-weeks in April and quits in May, the employee would have taken 10 days but would have only earned 4 days. Therefore, the employee would owe his employer 6-days.


  1. Vacation time may be unpaid

Most employers bank the vacation pay on behalf of an employee (itemized on the pay-slip) and pay the banked vacation pay when the employee takes vacation time . However, there is no requirement that vacation be paid time away from work. An employer is entitled to pay-out the vacation pay (either 4% or 6% of earnings) during each pay cycle and require an employee to take the vacation time as unpaid time away from work.


  1. An employee can lose vacation time, but not vacation pay

Some workplaces have use-it or lose it vacation policies, which are 100% legal when it comes to vacation time. If an employee does not use their vacation time before a specified period, that time is lost and cannot be carried forward.

When it comes to vacation pay however, an employee cannot lose this entitlement. Therefore, if an employer has a use-it or lose it vacation policy and the employee has not used their vacation before a specified period of time, then the employer must pay-out the accrued (i.e. earned/banked) vacation pay at the end of this period.


  1. All employees earn vacation

A myth persists that employees who are casually employed, have irregular hours, or work on short-term contracts are not entitled to vacation. This is not true. As discussed above, vacation time and pay are two separate entitlements. Though an employee may not have earned one-full day of vacation time in a year, this employee would still earn vacation pay.

For example, an employee who is casually employed and works only 10 days in a year would earn less than 1-day of vacation time in a year. However, if this employee had earnings of $1,120.00 for the 10 days worked (i.e. 8 hours per day at $14.00 per hour), the employee would have earned and is entitled to $44.80 of vacation pay during the vacation entitlement year.


  1. Employers can determine when vacation is taken

Employers are entitled to set policies and grant an employee’s request for vacation time based on business needs. So, even though employees are entitled to vacation time and pay, an employer can dictate when the employee takes vacation and even mandate that vacation be taken at a specific time during the year.


  1. Independent Contractors are not entitled to vacation

The Employment Standards Act applies only to employees and does not set standards or govern the working relationship of independent and dependent contractors. What this means is that there is no legal right for an independent contractor or dependent contractor to earn vacation time or pay.

This is not to say that contractors cannot take time away from work: they can take vacation based on mutually agreement with their principal (i.e. ‘employer’) and according to their contract. But an independent and dependant contractor is NOT eligible to receive vacation pay and is NOT entitled to a minimum number of vacation days each year.

Do you have questions about vacation? Contact-us for a consultation or send your question to

* The information in this blog post pertains to Ontario workplaces regulated by the Employment Standards Act: it is not meant to be legal advice about your particular situation. If you require legal advice, please contact us to schedule a consultation.

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