If you’re an employee in Ontario, Canada, you are entitled to vacation pay as per the Employment Standards Act (ESA). The amount of vacation pay depends on various factors such as the length of your employment and your hourly wage. In this tutorial, we will go through how to calculate vacation pay per hour in Ontario.
What is Vacation Pay?
Vacation pay is a type of compensation that employers provide to their employees who take time off work for a vacation. It is paid during the time when an employee takes a vacation or when they receive their regular wages. The amount of vacation pay depends on various factors such as the length of employment and hourly wage.
How to Calculate Vacation Pay Per Hour?
Calculating vacation pay per hour can be done using a simple formula. Here’s how:
Step 1: Find out your hourly wage rate from your employer
Step 2: Calculate your total gross earnings over the course of a year, including all bonuses and commissions.
Step 3: Divide your total gross earnings by the number of hours worked in a year. This will give you your hourly rate.
Step 4: Multiply your hourly rate by 4% (the percentage of vacation pay mandated by ESA).
Note: If you have been employed for less than five years, you are entitled to two weeks (4%) paid vacation per year. If you have been employed for five years or more with the same employer, you are entitled to three weeks (6%) paid vacation per year.
An Example Calculation
Suppose John Doe has been working with XYZ company for four years and his hourly wage rate is $20/hour. He earned $35,000 gross income last year while working 1,750 hours in total.
Using the formula above, John’s vacation pay per hour would be:
Step 1: His hourly wage rate is $20/hour.
Step 2: His total gross earnings are $35,000.
Step 3: His hourly rate is $20,000/1,750 hours = $20/hour.
Step 4: His vacation pay per hour is $20 x 4% = $0.80/hour.
Therefore, John’s vacation pay per hour is $0.80.
In Conclusion
Calculating your vacation pay per hour in Ontario can be done quickly and easily using the above formula. Understanding how to calculate your vacation pay helps to ensure that you receive the correct amount of compensation when you take time off work for a well-deserved break. Always remember to check with your employer or a legal representative if you have any questions regarding your rights as an employee under the Employment Standards Act (ESA).