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Across Ontario, Québec, and Manitoba, employment standards distinguish between vacation time (days off) and vacation pay (percentage of earnings). In all three jurisdictions, vacation time continues to accrue during periods of Short-Term Disability (STD) and Long-Term Disability (LTD) as long as the employment relationship continues. Disability leave generally counts as continuous service, meaning employees do not lose their entitlement to the statutory minimum number of vacation days while on disability.
By contrast, vacation pay is based on wages actually earned during the vacation entitlement or reference year. Where employees are receiving STD or LTD benefits paid by an insurance provider rather than salary from the employer, those benefit payments are not considered wages under employment standards legislation. As a result, statutory vacation pay does not typically accrue during STD or LTD, unless the employer’s contract or policy explicitly provides otherwise.
In Ontario, employees continue accruing their vacation time entitlement during both STD and LTD. If an employee has not yet reached five years of service, they accrue the two-week (10-day) minimum, and if they reach five years of service during leave, they become entitled to three weeks (15 days). Importantly, there is no statutory drop in entitlement when transitioning from STD to LTD; vacation time is tied to length of service, not the type or length of disability leave.
The same general approach applies in Québec and Manitoba: uninterrupted or continuous service during disability supports ongoing accrual of vacation time, while vacation pay is calculated only on actual earnings during the year. Employers may choose to provide more generous treatment through policy or contract, but from a minimum compliance perspective, continuing vacation time accrual without vacation pay during STD/LTD is consistent with employment standards in all three provinces.
I hope this helps!
-HRInsider Staff