Now that the vacation season is behind us, you may be facing the familiar challenges of sorting out time-off requests, calculating vacation pay, and managing workloads. For nonprofits, these tasks can be especially tricky, with limited resources and tight budgets adding to the complexity. In this article, we’ll help clear up the confusion and provide you with practical tips and tools to make managing vacation pay and employee time off a whole lot easier. Whether you’re in Ontario, British Columbia, Alberta, or beyond, this guide will break down the essentials.
Before you start: Download six free HR resources to help you manage vacations
Managing employee vacations can be tough, especially when resources are limited. That’s why we’ve put together a few handy tools and templates to help you streamline the process—and the best part is, they’re all free!
- Vacation and Absence Tracker (Reusable Year After Year)
Track employee vacation days, absences, and lates with a tool you can easily carry forward and use year after year. - Vacation Request Form
A simple form for employees to submit vacation requests for approval. - Vacation Payout Request Form
Easily handle requests for vacation payout with this ready-to-use form. - Volunteer Vacation Notification Tracker
Track volunteer vacation start days and end days efficiently and notify employees when they’ve reached their limit. - Notice Letter for Vacation Pay Out Policy Change
Communicate any changes to your vacation payout policy with this customizable notice letter template. - Vacation Policy
A comprehensive vacation policy template that outlines the key rules and processes around vacation days.
Get them all with just one click!
Vacation time vs. vacation pay—what’s the difference?
- Vacation Time
In Canada, all employees are entitled to time off, though some types of employment are exempt. Vacation time is earned based on the length of time an employee has worked with you. - Vacation Pay
Employees also earn vacation pay, which is a percentage of their earnings. The percentage can vary based on where you’re located, and whether it’s considered “vacationable” depends on provincial rules.
Simplify vacation tracking: Download our free employee vacation tracker
Tired of losing track of employee vacation days? Struggling to monitor who’s late and by how much?
Our must-have Employee Vacation and Absence Tracker offers a simple yet effective solution, designed to help you track vacations, leaves and late arrivals—all within an easy-to-use spreadsheet.
Key benefits:
- Track Employee Vacations
Are vacation requests overlapping? Do you struggle to see who’s on leave and when? Our tracker gives you a clear overview of vacation schedules, making it easier to plan and avoid conflicts. - Monitor Lates in a Snap
Keep a simple, clear log of employee tardiness. Track when employees arrive late, making it easy to spot patterns and address them if necessary. - Customizable for Your Organization
Whether you have 5 employees or 50, you can easily customize the tracker to reflect your leave policies and attendance rules. - Simple and Easy to Use
Our tool doesn’t require installation or training. It’s just a well-organized spreadsheet designed for quick, hassle-free tracking.
Don’t let vacation tracking become a headache. Download our free tracker today and experience the difference.
Vacation time and vacation pay across provinces
Each province in Canada has its own vacation laws, and while most give at least two weeks of vacation after one year of work (and three weeks after five years), the details vary. Here’s a quick snapshot:
| Alberta | In Alberta, employees are also entitled to two weeks of vacation after 12 months of employment, which increases to three weeks after five years. The vacation pay is calculated as:
Employers must give employees at least two weeks’ notice before their vacation and are required to provide vacation pay before the employee takes their vacation unless otherwise agreed upon. |
| British Columbia | In British Columbia (BC), employees are entitled to a minimum of two weeks of vacation time after 12 consecutive months of employment, increasing to three weeks after five years of service. Vacation pay is calculated as follows:
Employers must provide vacation time within 12 months of the employee becoming entitled, and any vacation pay must be paid either in advance of the vacation or on each pay period with written consent from the employee. |
| Manitoba | Employees in Manitoba are entitled to two weeks of vacation after one year of employment, increasing to three weeks after five years. Vacation pay is calculated at:
Employers must schedule vacations and pay vacation pay in advance unless there is a written agreement to the contrary. |
| New Brunswick | Period of employment is less than 8 years = 4% of gross wages.
Period of employment is 8 years or more = 6% of gross wages. |
| Newfoundland and Labrador | Vacation pay is calculated as 4% of gross wages, including commissions and overtime for employees who have worked less than 15 continuous years with the same employer.
Vacation pay is calculated as 6% of gross earnings for employees with 15 years or more of continuous employment with the same employer. |
| Northwest Territories | 4% of their total gross wages as vacation pay for the first five years of employment.
Upon completion of the 5th year, vacation pay is earned at the rate of 6%. |
| Nova Scotia | Employers must pay employees vacation pay of at least 4% of gross wages.
Vacation pay earnings increase to 6% of gross wages at the start of an employee’s eighth year of service (after completing 7 years). |
| Nunavut | Vacation pay means 4% of the total gross wages of an employee from the start date of work and for the first five (5) years of employment.
This increases to 6% of the total gross wages of an employee for the sixth and subsequent years of work with the same employer. |
| Ontario | Ontario’s Employment Standards Act (ESA) outlines that employees are entitled to two weeks of vacation after one year of service and three weeks after five years. Vacation pay is:
Employers can either pay vacation pay in a lump sum before the vacation or on each pay cheque with the employee’s consent. The ESA also provides guidelines on scheduling vacation time and ensuring it is used within 10 months of being earned. |
| Prince Edward Island | If the same employer employs an employee for less than eight years, vacation pay is at least 4%.
If an employee is employed continuously by the same employer for eight years or more, vacation pay of at least 6%. |
| Saskatchewan | In Saskatchewan, the rules are slightly more generous. Employees are entitled to three weeks of vacation time after each 12 months of work, and after 10 years of employment, this increases to four weeks. The vacation pay follows the same structure:
Saskatchewan’s employment standards emphasize timely vacation scheduling, typically allowing employees to take vacation within 12 months of earning it. |
| Yukon | Vacation pay is calculated as at least 4% of an employee’s gross wages. |
| Quebec | In Quebec, employees are entitled to two weeks of vacation after 12 months, increasing to three weeks after five years. Vacation pay is calculated at:
|
Managing vacation requests across provinces
Vacation time requests, especially during peak seasons like summer, can be overwhelming for employers. While employers generally have the right to determine when vacation is taken, employee preferences should be accommodated where possible. Here are some tips for addressing vacation leave conflicts as an employer:
1. Establish a Clear Vacation Policy
First-come, first-served: Set a policy where vacation requests are granted on a first-come, first-served basis. This motivates employees to plan ahead and reduces last-minute conflicts.
Staggered deadlines: For peak periods (like holidays), you can introduce staggered deadlines for requesting time off, ensuring everyone gets a fair chance.
Blackout periods: If there are times when you cannot afford multiple employees off, set clear blackout periods where vacation requests will be restricted.
2. Encourage Early Planning
Promote advance planning of vacations, especially during popular vacation seasons. This allows for better management of workloads and easier conflict resolution when clashes do occur.
3. Use a Vacation Calendar
Implement a shared calendar or leave tracking system so employees can see who’s already booked time off. This transparency can prevent conflicts from happening in the first place.
4. Prioritize by Seniority or Role
In case of conflicts, some employers use seniority as a deciding factor, especially if multiple requests are submitted at the same time. Another approach is prioritizing based on the criticality of roles during the period of leave.
5. Rotate Popular Vacation Times
For recurring peak vacation periods (such as year-end holidays), rotate who gets priority year by year. For instance, if someone was off last Christmas, prioritize another team member this time.
6. Consider Organizational Needs
Be transparent with employees that certain roles or teams may have specific periods when vacation might not be possible due to organizational needs. Plan staffing levels accordingly and discuss alternatives with employees.
7. Offer Compromise Solutions
Explore alternatives if there’s a clash—such as partial leave (half-days) or staggering vacations so both employees can take time off without leaving the organization short-staffed.
Offer flexible scheduling options, like remote work or adjusting shifts, if feasible.
8. Communicate Openly and Fairly
When resolving a conflict, communicate clearly with all involved employees, explaining why a decision was made. Highlight fairness and the organization’s needs so no one feels treated unfairly.
9. Set Up a Backup Plan
Have a system in place to handle important responsibilities while key staff are on leave. This could involve cross-training employees, so critical work continues smoothly.
10. Be Empathetic but Firm
While maintaining fairness, also consider personal situations—sometimes emergencies or important personal events arise, and flexibility is needed. Balance empathy with the operational needs of your nonprofit.
Handling vacation clashes this way shows employees that you value fairness and their personal time while keeping the organization running smoothly.
Vacation and public holidays
If a public holiday falls during an employee’s vacation, it is treated like any other vacation day. However, the employee has a couple of options:
- Substitute Day Off: The employee can take a substitute day off with public holiday pay within three months of the public holiday. If both parties agree in writing or electronically, this period can be extended to 12 months.
- Public Holiday Pay: The employer may choose to pay the public holiday pay directly, without offering a substitute day off, if the employee agrees in writing or electronically.
Additionally, employees can agree in writing or electronically to work on a public holiday during their vacation.
Vacation and leaves of absence
During leaves of absence—such as pregnancy, parental, sick, family responsibility, bereavement, declared emergency, family caregiver, family medical, critical illness, domestic or sexual violence, organ donor, reservist, child death, or crime-related child disappearance leave—the employment relationship is considered uninterrupted. Therefore, time spent on these leaves counts toward the employee’s vacation time entitlement year or stub period, but not toward vacation pay.
Vacation pay on termination or resignation
Vacation pay obligations do not end when the employment relationship does. In every province, when an employee resigns or is terminated, they must be compensated for any earned and unused vacation time. This pay must generally be settled within a specified time frame, usually between 7 and 14 days after the end of employment.
For example:
- In Ontario, vacation pay must be paid out on the final paycheque.
- In British Columbia, vacation pay is typically included in the employee’s final wages.
The following six provinces/territories accrue vacation pay on previously earned vacation pay:
- Alberta
- British Columbia
- Newfoundland and Labrador
- Nunavut
- Northwest Territories
- Saskatchewan
When to pay vacation pay
Typically, vacation pay for a completed vacation entitlement year must be paid to employees in a lump sum before they take their vacation. However, there are some exceptions:
- Taking Vacation in Short Periods: When vacation is taken in periods of less than one week, vacation pay can be included in each pay cheque as it accrues, provided the employee agrees to this arrangement in writing or electronically.
- Accrued Vacation Pay Agreement: With the employee’s written or electronic agreement, vacation pay can be paid at any mutually agreed time. The wage statement must clearly show the amount of vacation pay being paid.
- Direct Deposit: If wages are paid via direct deposit, vacation pay can also be paid this way, ensuring that the payment is made on or before the payday for the period during which the vacation occurs.
- Employee Agreement: With the employee’s consent, given in writing or electronically, vacation pay can be paid at a different agreed time.
What to include in your vacation policy
When crafting a vacation policy, it’s essential to balance the needs of your nonprofit with providing employees the opportunity to rest and recharge. A well-structured vacation policy must outline the following:
Vacation Entitlement:
- Detail the number of vacation days based on years of service (e.g., 2 weeks for 1-5 years, 3 weeks after 5 years).
- Specify vacation pay percentages (e.g., 4% of wages for 1-5 years, 6% for 5+ years).
- Ensure employees understand that vacation time must be taken, not just paid out.
Accrual and Use of Vacation:
- Outline when vacation time is earned and when it can be taken (e.g., after 12 months of service).
- Explain that vacation must be used within a 12-month period of being earned.
Vacation Requests:
- Define the process for requesting vacation (e.g., submitting a request two weeks in advance).
- Indicate how requests are approved (e.g., first come, first served or based on seniority).
Statutory Holidays:
- Clarify that statutory holidays during vacation do not result in additional vacation days but may qualify for statutory holiday pay.
Vacation Pay:
- Explain how and when vacation pay is provided (e.g., monthly, per pay period, or at the employee’s request before vacation).
- Include the method for paying out vacation pay upon termination.
Advance Vacation:
- State whether employees can take vacation in advance and how this impacts future vacation entitlements.
Termination and Vacation Pay:
- Include the procedures for paying out vacation pay when employment ends, in accordance with Employment Standards guidelines.
As an employer, you need to provide your employees with at least the minimum vacation time and pay required by your province’s laws. Many employers go beyond this by offering more vacation time or pay, which is a great way to support your staff. Just remember—if you set a higher standard in your vacation policy, you’re legally bound to it.
Recordkeeping and compliance
Keeping track of your employees’ vacation time and pay isn’t just good practice—it’s required by law. In many provinces, including Alberta and Ontario, you need to update these records within a week after each entitlement year. Make sure your records include:
- Vacation time earned but not taken before the start of the vacation entitlement year.
- Vacation time earned and taken during the vacation entitlement year or stub period.
- The balance of vacation time remaining at the end of the vacation entitlement year or stub period.
Vacation pay earned and paid, including the calculation method. Most provinces, including Alberta and Ontario, require that records be updated no later than seven days after the start of the next entitlement year.
Final Thoughts
Vacation rules vary across Canada, but by understanding the basics for each province, you’ll stay compliant and keep your employees happy. Need help navigating these rules or other employment matters? Our HR experts are here for you with tailored advice and support whenever you need it. Reach out to us for tailored guidance and support.
Disclaimer
This article provides general information about vacation pay and related regulations across Canada and is intended for informational purposes only. It does not constitute legal advice, and readers should not rely on it as a substitute for professional legal consultation. Employment laws can be complex and subject to change, and individual circumstances may vary. For specific legal advice regarding vacation pay or any other employment-related matters, please consult with an HR advisor.
Missed our previous articles? Read them here:
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- Nonprofit Employment Agreements and Termination Clauses: Tips and Free Templates
- HR Compliance 2024: Download All Essential HR Policies for Your Nonprofit
- Essential Resources for Harassment Investigations in Nonprofits
- HR Compliance for Canadian Nonprofits: A Comprehensive Guide
Important Resources:
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