Vacation pay in Canada by province: 4%, 6% and when it goes up

Vacation time vs vacation pay

Employment standards give employees two separate things: vacation time, the weeks off they are entitled to after each year of work, and vacation pay, a percentage of what they earned. They usually move together (two weeks with 4%, three weeks with 6%), but not always. Nova Scotia raises the pay a year before the time, Saskatchewan starts at three weeks, and in BC vacation pay is owed after five days of work even though vacation time comes after a year.

Which rules apply depends on where the employee works. Banks, airlines, trucking across provincial lines, telecoms and other federally regulated employers follow the Canada Labour Code; everyone else follows their province's employment standards.

Rates by province

These are the minimums from each government's own site, checked November 11, 2026. Your contract or collective agreement can give more, never less.

Jurisdiction	Starting entitlement	Goes up
Ontario	2 weeks, 4%	3 weeks, 6% from 5 years
British Columbia	4% after 5 calendar days; 2 weeks after 12 months	3 weeks, 6% after 5 consecutive years
Alberta	2 weeks, 4% (years 1 to 4)	3 weeks, 6% from 5 years
Quebec	4%; 1 day per month in the first year, up to 2 weeks	3 weeks, 6% from 3 years of uninterrupted service
Manitoba	2 weeks, 4%	3 weeks, 6% after 5 years
Saskatchewan	3 weeks, 3/52 (about 5.77%)	4 weeks, 4/52 (about 7.69%) after 10 years
Nova Scotia	2 weeks, 4%	6% from the start of the 8th year; 3 weeks in the 9th year
Federal (Canada Labour Code)	2 weeks, 4% after 1 year	3 weeks, 6% after 5 years; 4 weeks, 8% after 10 years

New Brunswick, Newfoundland and Labrador, Prince Edward Island and the territories have their own rules, which we haven't listed here: check your province's employment standards office. Some industries, such as construction in Alberta, also have special rates.

What wages it's calculated on

Vacation pay is a percentage of gross wages earned in the year. Ontario's guide spells out what that includes: regular earnings and commissions, non-discretionary bonuses, overtime, public holiday pay and termination pay. It excludes vacation pay itself, tips, severance pay and discretionary bonuses not tied to hours, production or efficiency. Other provinces define wages a little differently, so check yours before deciding on bonuses and tips.

Alberta treats monthly-salaried employees differently: their vacation pay is a normal week's wage for each week taken (monthly salary ÷ 4.3333), not a percentage.

Paid on each cheque or banked

There are two common ways to pay it:

Banked (accrued). The vacation pay builds up and is paid when the employee takes their time off. Ontario's default is a lump sum before the vacation starts. BC wants it at least 7 days before the vacation unless you agree otherwise; federal employers may pay it within the 14 days before the vacation.
On every cheque. The percentage is added to each pay. It's common for part-time and casual staff. In Ontario it needs the employee's written or electronic agreement and has to appear separately on the pay statement. BC allows it on scheduled paydays if you and the employee agree.

Paying it on each cheque doesn't remove the right to time off. The employee still gets their weeks of vacation; they just take them unpaid, because they've already received the pay.

A worked example

An Ontario employee earns $22 an hour, 37.5 hours a week, and has worked for you for three years. Her annual gross wages are $42,900, so her vacation pay is at least $1,716 (4%) for the year. If she takes her two weeks in August and you bank it, she receives the accrued vacation pay for those weeks. In her sixth year the rate becomes 6% and the time three weeks.

In Saskatchewan the same employee would earn 3/52 of $42,900, about $2,475, with three weeks off.

When an employee leaves

Any vacation pay owed, including the part of a year not yet taken, is paid out when employment ends, even if the employee worked less than a year. BC, Alberta and Saskatchewan all say so on their sites, and the federal code requires it within 30 days. The payout goes on the final pay and in block 17A of the Record of Employment.

Vacation pay in AcboBooks

In AcboBooks, set the vacation pay percent on each employee and choose how it's paid: On every paycheque adds it as its own "Vacation pay" line on each cheque and stub; Banked; paid when they take vacation builds it up in a Vacation Pay Payable account, and you pay it out with Vacation pay out on Run Payroll. Each cheque shows what was banked and the balance. The base is the cheque's wages, including overtime, bonuses and holiday pay, but not expense reimbursements or non-cash taxable benefits. Vacation hours can be tracked separately.

The percent doesn't change by itself. When an employee reaches the anniversary that raises their rate (five years in Ontario, three in Quebec), edit the employee and change 4 to 6.

Frequently asked questions

Is vacation pay 4% in Ontario?

At least 4% of gross wages for employees with under five years of employment, and at least 6% from five years. Vacation time is two weeks, then three weeks from five years.

Can I pay vacation pay on every cheque in Ontario?

Yes, if the employee agrees in writing or electronically. The vacation pay must be shown separately on the wage statement.

Do part-time employees get vacation pay?

Yes. Vacation pay is a percentage of what the employee earns, so it applies to part-time, casual and seasonal employees too.

Is vacation pay taxable?

Yes. It is employment income: CPP, EI and income tax apply, and it goes in box 14 of the T4.

This article is general information, not tax, legal or accounting advice. Rules and dates change; check the official source or ask your accountant before acting.