Vacation (Ontario)

Topic 140-ON     Importance: High


Communicates vacation entitlements, how they're calculated, and how vacation time is taken and recorded. 

Note that this policy template is written to include recommended vacation for salaried or office staff and vacation entitlements as shown are higher than what is outlined in ESA as per the ESA link provided below.  Adjust as necessary.  


  • Clarifies the rules and procedures for a topic that's important to all employees and promotes consistency for entitlements
  • Ensures that employees are clear on your procedures for recording absences
  • You're compliant.


  • Inconsistent communication of vacation entitlements and procedures, often by managers 
  • Without procedures for recording vacation time taken, employee vacation balances won't be reduced resulting in inaccurate and inflated vacation liabilities/accruals - which can lead to significant additional costs to your company
  • You're not compliant.

HR Expertise

This topic requires you to understand your company processes, but specialized HR subject matter expertise is not required to customize it.



This topic is well defined by legislation. If your vacation entitlements have been defined, the actual customization of this topic won't take long – maybe an hour – especially if you adopt the pre-written processes outlined in this policy with few modifications.  Additional time will have to be budgeted to research vacation entitlement norms in your industry and offered by your competitors. 


This topic can be independent. It was written to relate to other topics, but with slight modification, could be used independently.  Other topics it references:

  • Approving, Communicating, and Recording Absences policy, which is a separate topic that outlines how all exceptions to a normal work week are recorded. 

Key Decisions

  • What vacation benefits will you offer and after how much seniority?
  • How will you deal with carry-over of unused vacation time to the next vacation period?
  • How will vacation time off be recorded?
  • What department will be responsible for recording vacation time off and maintaining vacation balances?  HR or Finance?

Key Approvals

If your vacation program has not yet been defined, this topic should be approved by: 

  • Highest level executive in your company
  • Highest level Finance position in your company
  • Highest level HR position in your company, or the executive that HR reports to.

Additional Resources

We recommend that you include the following link in the Resources section at the end of this policy in your Handbook/Manual so that it's available to employees.  The topic outlined in this policy is governed by legislation and if you're going to communicate it and be compliant, it's much easier for you to make a general statement about the policy and provide a link to the source website so that: 

  • ​Your policy only includes policy intent, entitlements, examples, and procedures relating to vacation
  • Legislated components of the policy are always current and ensures compliance
  • Prevents your having to maintain any changes to legislation
  • Demonstrates transparency and intention to be compliant.

Ontario Employment Standards Act:

Additional Tips

  • This pre-written policy and vacation example in the Handbook/Manual template may surprise you, but it's the accurate way to calculate vacation. Vacation is earned, then taken and paid based on "vacationable earnings".  Many companies simply pay vacation as a continuation of payroll, but if an employee's vacationable earnings are over and above their regular wages, you'll be underpaying them. For example in Ontario, certain types of bonuses are considered vacationable earnings. So if you're paying Salina her regular wages when she's on vacation, you'll likely be underpaying her.
  • The Employment Standards Act does not differentiate between part time and full time employees when allowing time off for accrued vacation.  Therefore, adding 4% to basic salary in lieu of time off should only be allowed for casual employees.

Getting Started

Before you start customizing this topic, we recommend you:

  1. Research the vacation standards for your industry to make sure you are competitive with your vacation benefits. Ontario Employment Standards Act regulates minimum requirements for vacation entitlement and its minimum requirements may not be sufficient to attract top talent. 
  2. Liaise with Finance to understand how vacation time off will be recorded, which is an important part of the procedures for this policy. 
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