Canada

Vacation Pay, in plain English.

Vacation pay in Canada is a statutory entitlement set by each province's employment standards legislation, calculated as a percentage of gross wages earned rather than as paid days off alone. Minimum percentages and the vacation time they correspond to rise with length of service in most jurisdictions. Employers either pay it out each period or accrue it as a liability. Workzoom tracks accrual and payout against the employee record.

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How Vacation Pay works.

Vacation pay and vacation time are two separate entitlements that people routinely merge. Time is the leave itself. Pay is a percentage of gross earnings, which means it accrues on overtime, commissions, and most other wages, not on base salary alone. Employers can pay it out on each cheque or hold it as an accrued liability released when leave is taken, and the choice affects the balance sheet as well as the paycheque. Because the rules are provincial, a multi-province employer runs several entitlement schedules at once.

Where Vacation Pay goes wrong.

  1. Calculating the percentage on base pay only is the standard underpayment, since vacation pay generally accrues on total wages including overtime and commission.
  2. The second issue is termination: accrued and unpaid vacation pay is owed on the final cheque, and employers who treated it as a use-it-or-lose-it balance discover the liability at exactly the wrong moment.
  • 2000 Running payroll since Workzoom has run Canadian payroll for 26+ years.
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In the product

How Vacation Pay runs on Workzoom.

Vacation Pay is part of the Workzoom Payroll Suite. Workzoom runs HR, workforce, and talent on a single employee record across ten countries: Canada, the United States, the Bahamas, Jamaica, Trinidad and Tobago, Barbados, Antigua and Barbuda, Anguilla, the Cayman Islands, and the United Kingdom. Full gross-to-net payroll runs live in Canada, the United States, and the Bahamas. Pricing starts at $4 per employee per suite per month.

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Related terms.

Questions about Vacation Pay

Both, and they are separate entitlements. Vacation time is the leave itself, while vacation pay is a statutory percentage of gross wages earned. An employee accrues the pay on their earnings whether or not they take the time.
Generally yes. Vacation pay is calculated on gross wages, which typically includes overtime, commissions, and most other earnings, not base salary alone. Calculating on base pay only is a common source of underpayment.
Yes. Accrued and unpaid vacation pay is generally payable on the final cheque regardless of whether the employee took the corresponding time off. It is an earned entitlement rather than a lapsing benefit.
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