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Alright, let’s break this down.
-The employee lives in Ontario, so Ontario Employment Standards Act (ESA) applies.
-Less than 5 years of employment.
-Vacationable earnings: $180,000 (assumed to be annual earnings for 2025).
-Only 1 vacation day taken in 2025.
-Termination date: May 31, 2025.
Relevant ESA Rules (Ontario)
For employees with less than 5 years of service:
-Entitled to 2 weeks of vacation per year.
Vacation pay = 4% of gross wages (i.e., vacationable earnings).
If vacation time was not taken, unused vacation days must be paid out at the time of termination.
Step-by-Step Calculation
1. Annual Vacation Entitlement in Days
Assuming a 5-day workweek:
2 weeks = 10 vacation days per year.
2. Vacation Pay Accrual (for Jan 1–May 31, 2025)
Time worked: 5 months out of 12 = 5/12 of the year.
Vacationable earnings from Jan 1–May 31:
5 over 12 × 180,000 = 75,000
Vacation pay earned:
4% × 75,000 = 3,000
3. Vacation Taken
1 day taken = 1/10 of annual entitlement.
That’s equivalent to:
1 over 10 × 4% × 75,000 = 300
4. Vacation Pay Owing
Total accrued: $3,000
Already used (1 day): $300
Owing at termination:
3,000 − 300 = $2,700
Final Vacation Pay Owing: $2,700
This amount should be paid in addition to any other wages owing at the time of termination.
Additional Notes
If the employee’s vacation pay is paid on each paycheque (some employers do this), ensure you check if any of the $3,000 has already been paid.
Always double-check employment contracts or company policies for any enhanced entitlements. Learn more about vacation pay calculation requirements and how to calculate vacation pay on the HRInsider site.
-HRInsider Staff