What is vacation pay?
Vacation pay is any payment issued to employees providing a sum of money they can draw upon during their scheduled vacation time. It is calculated as a percentage of an employee’s gross wages during the applicable vacation entitlement year and typically accrues at a rate of four percent of gross wages where the employee’s vacation time entitlement is two weeks per year. When entitlements are longer than two weeks, vacation pay accrues an additional two percent per additional week of vacation time entitlement. For example, vacation pay is calculated at six percent of gross wages where the vacation time entitlement is three weeks. The earnings or wages included in the calculation can vary across jurisdictions.
Our blogpost, 15 Essential HR Policies, can help streamline your vacation policies, performance evaluations, standards of behaviour, progressive discipline plans, and more!
