Paid time off

Paid time off in Canada for federally regulated employers is governed by the Canada Labour Code and entitles employees to a minimum of two weeks of annual vacation after completing one year of continuous employment. After five consecutive years with the same employer, employees receive three weeks of vacation annually. Employees who have completed ten consecutive years of service are entitled to four weeks of annual vacation. These minimums apply across all federally regulated industries, including banking, telecommunications, interprovincial transportation, and crown corporations.

The Canada Labour Code, Part II, establishes these vacation entitlements as mandatory minimums that employers cannot reduce or waive. Vacation pay must be calculated based on the employee's regular wages and is typically paid out either as time off or as compensation, depending on employer policy and applicable collective agreements. Employees may carry over unused vacation days to the following year in some circumstances, though employers may require vacation to be taken within a specified period.

Provincial jurisdictions maintain separate employment standards that may provide more generous vacation entitlements than federal standards. Employers operating across multiple provinces must comply with the highest applicable standard in each jurisdiction where they employ workers. Payroll teams managing federally regulated workforces must track tenure milestones carefully to ensure vacation accrual increases at the correct thresholds. Proper documentation of employment start dates and continuous service periods is essential for compliance and to support accurate vacation pay calculations during payroll processing and employee terminations.