First published on Wednesday, July 9, 2025
Last updated on Thursday, July 10, 2025
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Under the Employment Standards Act, employers in Ontario must give their employees vacation time. Depending on how often they’re scheduled to work, what their earnings are and your company policies, you’ll have different obligations. Here’s a breakdown of how vacation time works in Ontario.
Note: Vacation time and vacation pay & entitlements are different and cannot be managed the same way.
Ontario vacation time entitlements
Vacation entitlement year vs. Alternative vacation year
Depending on your company policies, you have different options on how you offer vacation time. Under a vacation entitlement year structure, employees must complete one full year of employment before they are entitled to take vacation time. However, they earn vacation pay (typically 4% of wages) during that first year. Instead of each employee having a different vacation year based on their hire date, an alternative vacation year uses a consistent timeframe for all employees across the company.
Vacation entitlement year
Each employee earns vacation based on a 12-month period starting from their hire date. After 1 year of work, the employee is entitled to take paid vacation days and a new vacation entitlement is earned every 12 months from their hire date.
Example: If someone starts on March 1, 2025, their first “vacation entitlement year” ends on February 28, 2026. They get their first vacation after that.
This option is common among small businesses in Ontario, but it means that new employees aren’t entitled to take the vacation time until the 12 months are complete.
Vacation pay may be paid out with each paycheck or held until the employee takes vacation (in the following year), depending on your company's policy.
Alternative vacation year & Stub period
An alternative vacation year allows you to choose a company-wide vacation period, e.g. Jan 1 – Dec 31—as opposed to the vacation year beginning upon an employee’s start date.
Stub period is the time between the employee’s start date and the start of your vacation year. This applies to employees whose start period does not align with the vacation year. This only applies if a company has opted for an alternative vacation year.
During the stub period, the employee earns partial (pro-rated) vacation time. Then, they start fresh on your chosen vacation year schedule.
Example:
Your company vacation year is Jan 1 – Dec 31.
Someone is hired on Oct 1.
Their stub period is Oct 1 – Dec 31.
They earn partial vacation for those 3 months.
On Jan 1, they start their first full vacation year.
How much vacation time per year
Depending on the policy you choose for your business, employees may have different minimum vacation day entitlements. Employers can always choose to give employees more than these amounts as part of their company policies.
Under 1 year of employment
If you’ve chosen to follow a vacation entitlement year structure, employees do not yet have the right to take paid vacation days during their first year. They are earning entitlement to be used after completing 12 months of employment. This time period will be when they earn their days to be used in the following year.
If you use an alternative vacation year, employees who join mid-year will earn a prorated amount of vacation time based on the standard 10-day allowance—adjusted proportionally for part-time or reduced work schedules.
Over 1 year, under 5 years of employment
Employees with between 1 and 5 years of employment are entitled to a minimum of 2 weeks (10 working days, or pro-rated for part-time or reduced works schedules) of vacation per year, that resets every 12 months or company year. This minimum entitlement is the same between vacation entitlement years and Alternative vacation years.
Over 5 years of employment
For employees with over 5 years of employment, the standard entitlement is 15 days (3 weeks). This is the minimum entitlement, and is also adjusted proportionally for employees that work part time or have a reduced work schedule.
How unused vacation days work in Ontario
Depending on multiple factors, such as your workplace policies, how you’ve structured your vacation years and employee resignation, you will need to handle unused vacation days accordingly. Here’s some guidance on how to handle different situations.
When vacation days should be used by
If you’re using the vacation entitlement year model for your business, employees should use their statutory vacation within 10 months of the vacation entitlement year beginning. If they don’t, the dollar amount of their statutory vacation pay must be paid out.
It is important for employers to note that it is the employer’s responsibility to ensure vacation time is taken in the year it is to be used. Vacation time can also be scheduled by the employer to prevent any unused issues.
If you use an alternative vacation year model, this time window applies to the entire vacation year – such as Jan 1 to Dec 31.
Unused vacation days and employee resignation
If an employee resigns, any accrued vacation pay must be paid out to the employee. Find out more about how vacation pay works in Ontario.
How employer policy can affect vacation days
Carryover/rollover of vacation days
Under the ESA, employers are not required to allow carryover or rollover of vacation days to the next vacation entitlement period.
However, employees can carry over statutory vacation time if the employer allows it. This would be recognized as a benefit above the ESA, but it’s important to have some sort of agreement documented—such as a standardized vacation policy in an employment contract, and then a document created to note when this happens.
Also, depending on your workplace policy, if you’ve granted additional days beyond the statutory amount, you could allow employees to carry those over to the next year.
“Use it or lose it” vacation day policies
Employers cannot apply a use-it-or-lose-it vacation day policy to statutory vacation day entitlements. If an employee’s statutory vacation entitlement goes unused for the vacation entitlement year, it must be paid out to them.
It is critical for employers to be aware that they are required to ensure that employees use their vacation time.
However, if you have granted additional vacation entitlement beyond the statutory amount under the ESA, you can apply this policy to non-statutory vacation days.
Need help with managing employee vacation time and scheduling?
BrightHR can help. We provide seamlessly integrated employee vacation management systems and shift and scheduling software, meaning employees can see their remaining vacation entitlements, submit requests themselves and managers can instantly approve or deny requests based on a high level scheduling overview.
Book a free demo today with our friendly team and see how BrightHR can help you manage your scheduling now and beyond.