How does vacation pay work for hourly employees in ontario?

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Joshua Bergnaum asked a question: How does vacation pay work for hourly employees in ontario?
Asked By: Joshua Bergnaum
Date created: Sun, May 2, 2021 11:32 AM
Date updated: Wed, Jun 29, 2022 5:44 PM

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However, employees earn vacation pay as they earn wages. So if an employee who is paid by the hour works even just one hour, they are still entitled to four per cent or six per cent of the hourly wage as vacation pay.

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Yes. Commission employees must get vacation pay in Ontario. As an employment standard, vacation pay is mandatory and cannot be waived pursuant to Part III, s. 5 (1) of the Employment Standards Act. Vacation pay must be paid on top of the employee’s commissions.

Employees are entitled to two weeks of vacation time after each 12-month vacation entitlement year. Ordinarily, a vacation entitlement year is a recurring 12-month period beginning on the date of hire. Where the employer has established an alternative vacation entitlement year that begins on a date other than the date of hire, the employee is also entitled to a pro-rated amount of vacation time for the period (called a "stub period") that precedes the alternative vacation entitlement year. Vacation pay must be at least four per cent of the "gross" wages (excluding any vacation pay) earned in the 12-month vacation entitlement year or stub period (where that applies).

However, employees earn vacation pay as they earn wages. So if an employee who is paid by the hour works even just one hour, they are still entitled to four per cent or six per cent of the hourly wage as vacation pay. Calculating stub period vacation entitlements

Entitlements for Vacation Pay in Ontario Employees in Ontario fall into two categories: – Employed for less than five years receive two weeks of Vacation Days off at a Vacation Rate of 4% of Gross Wages – Employed for five or more years receive three weeks of Vacation Days off at a Vacation Rate of 6% of Gross Wages Strictly speaking, vacation time is earned in one year and then used in the next, however many employers allow vacation time to be used in the year that it’s earned. Though they may seem like one in the same, Vacation Days and Vacation Rate are two very different things.

Vacation pay must equal at least 4% of wages. Employees are entitled to a minimum of 4% of the wages they earned during the vacation entitlement year as vacation pay. “Wages” includes the employee’s regular earnings (including commissions), bonuses or gifts that are not discretionary or which are related to hours work, overtime pay, public holiday pay and termination pay.

Vacation pay 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. Wages are defined in section 166 of the Code as every form of remuneration for work performed but does not include tips and other gratuities.

Accruing an employee’s vacation pay based on their eligible earnings can be accomplished by tracking: their accrued vacation pay at the beginning of each year, the vacation pay they earn as the year progresses, and the vacation pay paid out to them each time they take vacation leave You can also accrue vacation entitlement based on the vacation pay hours an employee earns each pay period. For example, accruing 3.25 hours each bi-weekly pay period for an employee who a) works 40 hours a week and b) is entitled to 2 weeks (2 x 40 = 80 hours) of vacation pay annually, works out to 84.5 accrued vacation pay hours at the end of the year (3.25 x 26 = 84.5 hours).

To be eligible for stat holiday pay in Ontario, employees simply have to follow the "first and last" rule - there are no restrictions on how long an employee has worked an employer. In order to qualify for Public Holiday pay, employees must work their last regularly scheduled shift before the holiday as well as their first regularly scheduled shift after the holiday, unless they have permissions to miss their shift due to reasonable cause or have their employer's consent. Failure to work the entire shift without reasonable cause may result in disqualification of entitlement to Holiday pay.

It’s simpler than you think. Try out this example: you have a full-time hourly employee, Anna, who is eligible for up to two weeks’ vacation pay. Anna’s total vacation time equals 80 paid hours per year, or roughly 4% of the max possible hours she could work over 52 weeks, sans overtime.

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