Great question — Ontario’s Employment Standards Act (ESA) and common law notice interact a bit differently when it comes to vacation pay.

Statutory Notice under the ESA

When you provide statutory notice (working notice), the employee remains employed during that period.

They continue to earn vacation pay as if they were actively working.

Therefore, vacation pay must be calculated on the statutory notice period (2 weeks in your example).

Common Law Pay in Lieu of Notice

Common law notice is not an ESA requirement; it is a court-imposed entitlement for reasonable notice of termination.

When employers provide pay in lieu of notice (instead of requiring the employee to work), this is treated as damages for wrongful dismissal, not as “wages” under the ESA.

Because of that, the ESA does not require vacation pay to accrue on common law pay in lieu.

That said, some employers do pay vacation on the common law portion for consistency or if employment contracts/policies require it — but it is not legally mandated under the ESA.

Using Your Scenario as a Practical Example

2 weeks ESA notice: Vacation pay (6%) must be calculated on this portion.

6 weeks common law pay in lieu: Vacation pay is not required under the ESA, unless your contract or company policy explicitly says so.

So strictly speaking, you would calculate 6% on 2 weeks only, not on the full 8 weeks.

Answer in short:
Vacation pay in Ontario is only mandatory on the ESA notice period (2 weeks here). It does not have to be added on the common law pay in lieu of notice unless contract, policy, or settlement terms specify otherwise.

-HRInsider Staff