How vacation pay and vacation accrual work in Canada (province by province)

Ask most managers "how much vacation does this employee get" and they will answer with a number of weeks. That is only half the entitlement. Vacation time (the days off) and vacation pay (the money) are two separate things in Canadian employment law, calculated separately and tracked separately, and a lot of the disputes and payroll errors we see trace back to employers treating them as one number. This guide walks through both halves, province by province, plus the accrual mechanics and edge cases that trip up a shared spreadsheet. Vacation sits alongside statutory holidays and sick leave as the entitlements a Canadian tool most often gets wrong by province.

Vacation time and vacation pay are not the same entitlement

Vacation time is the number of weeks or days an employee is entitled to take off. Vacation pay is the percentage of wages they must be paid for that time, and it is calculated on earnings, not simply handed over as "a week of base salary." The two entitlements move together at the minimums (more service usually means more weeks AND a higher percentage) but they are governed by separate rules, and an employer can get one right and the other wrong. A tool or a payroll process that only tracks the days-off calendar and ignores the percentage calculation is only doing half the job.

Provincial minimums: vacation time

Vacation entitlement is set by each province and territory, not federally, for most employers. The published employment-standards minimums generally look like this, though every employer should confirm the current figures against their own province before relying on them:

• Ontario, British Columbia and Alberta: 2 weeks of vacation after each of the first several years of employment, rising to 3 weeks after longer service (Ontario and BC set that step-up at 5 years).
• Saskatchewan starts higher than most: 3 weeks after 1 year, rising to 4 weeks after 10 years.
• Quebec: 2 weeks after 1 year of continuous service, rising to 3 weeks after 3 years of continuous service.
• Federally regulated employers (banks, airlines, telecom, interprovincial transport) follow the Canada Labour Code, which is broadly similar to the provincial pattern but has its own thresholds and its own longer-service step-ups.

These are minimums an employer must meet, not a ceiling. Many employers offer more generous vacation as a retention tool, and a good HR system should let a policy be more generous than the statutory floor without breaking the underlying compliance math.

Provincial minimums: vacation pay (the percentage)

Vacation pay is usually expressed as a percentage of the wages earned during the period it was accrued (often called the "vacation entitlement year"), not a flat day rate. The common pattern:

• Ontario, British Columbia and Alberta: at least 4% of gross wages for the 2-week minimum, rising to at least 6% once the longer-service threshold for 3 weeks is reached.
• Saskatchewan: at least 6% of wages given its higher starting entitlement (3 weeks), rising to about 8% at the 4-week threshold.
• Quebec: at least 4% of gross wages in the first years of continuous service, rising to at least 6% once the employee passes 3 years of continuous service.

Treat every number in this article as the shape of the rule, not a rate to run payroll on today. Provincial minimums change, and the current figure for your jurisdiction should always be confirmed against your province's employment-standards authority (in Quebec, the CNESST) before you calculate a payout. This is general information, not legal or payroll advice.

Accrual vs lump-grant: two different ways to administer the same entitlement

Employers land on one of two administrative models, and mixing them up inside one company is a common source of confusion:

• Accrual method: vacation time and vacation pay build up gradually as the employee earns wages, typically posted each pay period (for example, a fixed number of hours of vacation time credited per pay period, and the vacation-pay percentage set aside from each cheque). Common in hourly and variable-hour workplaces because it scales naturally with hours actually worked.
• Lump-grant (or "anniversary" / "calendar-year") method: the full year's vacation entitlement is granted up front, either on the employee's hire anniversary or at the start of a calendar/fiscal year, and the employee draws down against that balance through the year. Common in salaried workplaces where a clean annual balance is easier for both HR and the employee to reason about.

Both are legitimate ways to administer a compliant vacation policy, provided the underlying minimum is respected and vacation pay is still calculated correctly on actual earnings. What is not legitimate is a system where nobody can say, on a given day, exactly how many hours or dollars an employee has accrued versus used. That is the gap a shared spreadsheet almost always falls into once a company has more than a handful of employees.

How vacation pay is calculated on variable and commission pay

A flat "vacation pay equals one week of base salary" assumption breaks down the moment an employee is not on a fixed salary. Because vacation pay is a percentage of earnings in the reference period, it naturally flexes with what the employee actually made, which matters for:

• Commission and bonus-eligible roles: vacation pay is calculated on total wages including commissions and most bonuses paid in the vacation entitlement year, not on base salary alone. A sales rep having a strong quarter should see that reflected in their vacation pay.
• Overtime and shift premiums: these generally count as wages for the vacation-pay calculation in most provinces, so an employee who worked a lot of overtime in the reference period should see a higher vacation-pay amount, not the same flat figure as a quieter period.
• Variable-hour and part-time staff: because the percentage applies to actual earnings, a part-time employee's vacation pay is naturally proportional to what they earned, with no separate "part-time formula" needed. The complexity is in tracking the reference-period earnings accurately, not in a different rate.

Exactly which earnings components count (and the precise reference period) is set by each province's employment standards and can have exceptions, so this is another place to confirm the specific rule rather than assume it matches a neighbouring province.

Part-time employees get the same percentage, applied to their actual earnings

A common misconception is that part-time staff are entitled to a lesser vacation-pay percentage. In most provinces they are not: the same statutory percentage applies regardless of full-time or part-time status, calculated on whatever they actually earned. The place part-time status genuinely changes the math is service-based thresholds for TIME (some provinces measure the step-up to a longer vacation period in periods of employment rather than hours), so a long-tenured part-time employee can be entitled to the longer vacation period even while working fewer hours than a full-time colleague.

Termination and vacation payout

When employment ends, accrued and unused vacation pay is generally owed to the employee as part of the final pay, in every province. The two things employers most often get wrong at termination:

• Forgetting vacation pay accrued on the final pay period itself (including any pay in lieu of notice, in provinces where that also attracts vacation pay), not just the running balance up to the last regular cheque.
• Relying on an ad hoc manual calculation instead of a running, auditable balance, which is exactly where errors creep in under the time pressure of an offboarding.

A running, always-current accrual balance, visible before the termination conversation even starts, removes most of this risk. Confirm your province's specific termination-pay rules (and any employment-standards or notice-period interactions) before finalizing a departing employee's final pay.

Why a shared spreadsheet drifts

Every piece above compounds: a different accrual rate and percentage per province, a step-up threshold tied to service that has to be recalculated as each employee crosses it, a percentage that has to be reapplied every time variable pay changes, and a payout calculation that has to be right under time pressure at termination. A spreadsheet does not fail all at once. It drifts: one employee's anniversary step-up gets missed, one commission cheque never gets its vacation-pay percentage applied, one termination payout is estimated instead of calculated from a real balance. Individually small, but each one is a real dollar owed to a real employee, and each one is a potential employment-standards complaint.

What to demand from your HR tool

1. Vacation TIME and vacation PAY tracked as two distinct, linked entitlements, not one number.
2. Per-province minimums and service-based step-ups encoded as policies, not re-derived by hand each time someone crosses a threshold.
3. Support for both accrual and lump-grant administration, so the tool matches how you actually run payroll rather than forcing a model switch.
4. A running, auditable accrual balance per employee, visible at any time, not reconstructed under pressure at termination.
5. Multi-location and multi-province scoping, so an employee in Ontario and an employee in Quebec each accrue against the right rule.
6. A clear, honest line between HR software and payroll (see below), because the dollar calculation on variable and commission pay ultimately has to reconcile with what payroll pays out.

Where Workleaf fits (and where it does not)

Workleaf encodes Canadian provincial vacation minimums as ready-made time-off policies and tracks accrual and balances per employee, so the vacation-time side of this problem, and the running balance that termination payouts and manager conversations depend on, stays accurate and visible without a hand-built spreadsheet.

To be precise about the line: Workleaf is a system of record and engagement layer. It does not run payroll and does not calculate or remit the dollar value of vacation pay to the CRA or Revenu Quebec, so it does not cut the vacation-pay cheque itself. It hands off a clean, current accrual and policy picture to the payroll you already run. Native payroll and an applicant tracking system are on the roadmap, not in the product today.

That is the honest split: Workleaf keeps the provincial policy, the accrual balance, and the time-off record straight and visible to managers and employees, and your payroll system applies the actual dollars, including the percentage calculation on variable and commission earnings. That is the division most Canadian SMBs actually want, rather than replacing a payroll they already trust.

Pricing is simple and public. Basic is $15 CAD per month for up to 10 employees, then $1.50 CAD per additional employee. Advanced is $30 CAD per month for up to 10 employees, then $3 CAD per additional employee, and adds the full talent suite (reviews, 1:1s, surveys and analytics). No quotes, no surprises.