Vacation pay in Canada is defined as a percentage of the wages of an employee during the year of employment in respect of which the employee is entitled to the vacation. For most provinces in Canada, vacation pay comes in at an additional 4% on top of a worker’s base salary for the first five years of employment. There are, of course, a few exceptions.
Vacation Entitlements in Canada
In Saskatchewan, employees receive an additional 5.77% before nine years of employment, while in Quebec, workers earn the same 4%, but only for the first three years of employment. Workers in Nova Scotia, New Brunswick, and Prince Edward Island receive 4% for the first eight years, while in Newfoundland and Labrador, employees earn 4% up to the first 15 years of employment. Generally speaking, after five years of employment, vacation pay is then an additional 6% on top of an existing base salary. Again, there are exceptions:
- In Saskatchewan, that number rises to 7.69% after 10 years
- In Quebec, it comes in at 6% after four years
- In New Brunswick, Nova Scotia, and Prince Edward Island, the rate is 6% after nine years
- In Labrador and Newfoundland, the rate comes in at 6% after 16 years
It is equally important to note that the additional amount is calculated based on all vacationable earnings to which an employee is entitled. There are two methods that are commonly used for issuing vacation pay:
- Employees can receive vacation pay at the time they take the vacation. This is the most common method.
- Employees can receive an additional amount to be paid with each pay check over the course of a year. The only exceptions to this are in Quebec and Prince Edward Island. This method can be used as long as an employee agrees to it in writing, or if the employee has been notified of this decision being made by their employer on their behalf.
The Fine Print for Vacationable Entitlements in Canada
It’s essential to note that these earnings do not include tips and other gratuities. Likewise, they do not include any payment that may be owed to the employee in question at the time of termination, compensation under the conditions of an unjust dismissal, or compensation for a layoff of any kind.
Over all, employees are entitled to two full weeks of vacation after their first year of employment. This is true in all provinces except Quebec and New Brunswick, where workers get one day for each calendar month they work, or two weeks. In Newfoundland and Labrador, employees get two weeks of vacation pay immediately after employment; the same is true for Prince Edward Island. In Saskatchewan, employees get three weeks after working one full year at the same job.
Depending on the province, vacation entitlements can increase in as few as three years or in as many as 15; it all depends on location. Likewise, it’s important to note that minimum vacation days must be used within 10 months of the end of the year in which they were accrued.
Expand into the Great White North with an Experienced Global Expansion Partner
Canada is one of the world’s most popular global expansion destinations, offering organizations unique opportunities in any one of its provinces. But as with any global expansion, hiring the right talent to lead your Canadian expansion can be a challenge—which is why partnering with an experienced expansion ally is so important.
Velocity Global and our International PEO (Professional Employer Organization) solution have made global expansion possible for hundreds of companies, many of which have made Canada the next stop on their global expansion. Through International PEO, Velocity Global becomes your Employer of Record (EOR), freeing you to remain focused on your daily operations.
Want to learn more about how International PEO can streamline your Canadian expansion and save you up to 60% when compared to entity establishment? Let’s talk.