Vacation Pay in Ontario: Why 4% Shows Up

You open your pay stub and find a line you did not expect: "vacation pay", a few dollars, sitting between your wages and your deductions. Or you look for it and find nothing, and wonder if you are missing out. In Ontario, vacation pay is money your employer owes you on top of your wages, and for most people in their first five years at a job it is 4% of the wages you earn. Whether it arrives on every cheque or in one lump later depends on how your employer sets it up.

What vacation pay is, in plain words

Vacation pay is a percentage of your earnings that your employer must pay you because you work. It is separate from vacation time, which is the days off you are allowed to take. Under Ontario's Employment Standards Act, an employee with less than five years at the same employer earns vacation pay of 4% of their wages. After five years the rate rises to 6%. Part-time, casual and student employees are generally covered too: the rule is about wages earned, not about being full time.

The 4% is calculated on your wages before deductions, and it does not include the vacation pay itself. So you do not earn "vacation pay on vacation pay".

Why it shows up on some cheques and not others

There are two usual ways employers pay it.

• On every cheque. Your stub shows a vacation pay line each pay period. In Ontario this generally needs a written agreement between you and your employer, so look at what you signed when you started.
• When you take time off. The money is set aside as you earn it and paid before or during your vacation. Your stub may then show a running balance, or nothing at all until the day it is paid.

If you work a short summer or term job, ask which one applies to you before your first pay date. If you are never paid time off, the 4% still has to reach you by the time the job ends, and the official guide explains when.

A worked example: 20 hours a week at $18

This is an example with round numbers, not a real person's pay. Say you work 20 hours in a week at $18 an hour.

1. Wages: 20 × $18 = $360.
2. Vacation pay at 4%: $360 × 0.04 = $14.40.
3. Together, before deductions: $360 + $14.40 = $374.40.

Now stretch it across a 15-week term: $360 × 15 = $5,400 in wages, and 4% of that is $216. That is real money, and it is easy to lose track of if it is held back until the end. Like the rest of your pay, vacation pay is taxed, so what lands in your account is smaller than these before-deductions numbers. Our post on Ontario paycheque deductions shows what comes off.

How to check your vacation pay

1. Find your employment agreement or ask your manager: is vacation pay on each cheque, or paid when you take time off?
2. Add up your gross wages for a pay period (hours times your rate, plus overtime). Multiply by 0.04.
3. Compare that with the vacation pay line on your stub. If it is a few cents off, rounding is usually why.
4. If it is paid later, keep a note of the running total yourself so you know what is owed.

Our pay stub checklist walks through the rest of the lines. Remember that overtime counts as wages too, so a week with extra hours earns more vacation pay; see overtime rules in Ontario. Public holiday pay is a different entitlement, covered in holiday pay in Ontario.

Questions people ask

Is vacation pay the same as holiday pay?

No. Vacation pay is the percentage of your earnings tied to vacation time. Public holiday pay is owed for the nine public holidays. They are separate rules, and a stub can show both.

I only work part time. Do I still get it?

Generally yes. The rule is based on the wages you earn, so a part-time or student job earns vacation pay just like a full-time one. Some jobs follow special rules, so check the official guide for yours.

Can I waive vacation pay?

Not in a way that counts. Employment standards are minimums your employer cannot contract out of, so a workplace saying "we don't do vacation pay" does not change what the law says. Start by asking politely, and if that fails, the Ministry of Labour's employment standards office is the place to go.

Does it matter for my study permit hours?

Vacation pay is money, not hours. Your off-campus hours limit is counted in hours worked, and the current rules come from Immigration, Refugees and Citizenship Canada (IRCC). Our post on study permit work hours explains how that works.

Keeping track with CampusWage

The easy way to miss vacation pay is to never compare your stub with what you expected. CampusWage, a free shift and wage tracker for students, works out what each shift pays after unpaid breaks, overtime and vacation pay, and shows each pay period as a pay cheque with its pay date. You can check that against what lands, and see right away if a line is missing or off.

This is general information, not tax, legal or immigration advice. Rules and amounts change, and some jobs follow special rules. Check ontario.ca, the Canada Revenue Agency and IRCC for the current rules.