Vacation Accrual & Carryover Rules in Canada: A Province-by-Province Guide
Vacation Accrual & Carryover Rules in Canada: A Province-by-Province Guide
By Ashley Thiel
A change in calendar year means that a lot of things reset. One thing many employees get excited about is a fresh set of vacation days for the year.
But what if you didn’t use all your vacation time in the precious year? Do you get to carry it over to the next year? Do you lose those days? Is your employer required to pay you out?
The quick answer is it depends. Vacation carryover in Canada is set at the provincial level. This means that vacation laws in Ontario can be different from those in Alberta, Quebec or other provinces.
Below, we’ll provide clarity about vacation accrual and carryover rules in Canada.
In this blog:
- How does vacation carryover work in Canada?
- What is vacation accrual carryover?
- Is unlimited vacation legal in Canada?
- Can you have a use it or lose it vacation policy in Ontario, Canada?
- Vacation rules by province in Canada
How does vacation time work in Canada?
All employees are legally entitled to vacation time. Vacation rules in Canada differ by province. So, how much vacation time you are entitled to could change simply by where you live and work.
For example, two workers with exactly the same experience and job title could have different vacation entitlements. One of the workers could get 10 vacation days while the other gets 15.
The difference between provinces is not significant. In general, employees start at 4% vacation pay (2 weeks' worth) after one year, increasing to 6% (3 weeks' worth) after 5 years.
What is vacation accrual carryover?
Vacation accrual carryover allows employees to transfer unused vacation time from one calendar year to the next. This type of policy provides employees with greater flexibility, enabling them to save vacation days for extended time off, major life events, or future travel plans.
In Canada, vacation carryover policies are determined by employers but must align with provincial and federal employment standards legislation.
While employers can place reasonable limits on how much vacation can be carried over, they generally cannot require employees to forfeit their statutory minimum vacation entitlement.
As a result, unused statutory vacation time often must be carried forward or paid out, particularly when an employee leaves the organization.
How vacation accrual carryover works:
Accrual of vacation time
Some organizations have a pre-defined number of vacation days per year per employee based on their role and experience.
In other organizations, employees earn vacation time gradually over the year. This may be calculated as a set number of days per year, a percentage of gross wages, or an hourly accrual based on the number of hours worked. Accrual rates often increase with length of service, reflecting an employee’s tenure with the organization.
Carrying over vacation time
If an employee does not use all of their earned vacation time by the end of the accrual period, some or all of the unused balance may be carried forward into the next year. This carried-over time is added to the employee’s new annual vacation allotment, creating a larger bank of available days.
Limits and caps
Most employers set clear limits on how much vacation time can be carried over. For example, a policy may allow employees to carry over up to one week (or a specific number of hours), with any excess either paid out or required to be used by a certain date.
Deadlines for using carried-over vacation are also common to prevent excessive accrual. For example, employers may require you to use carried-over vacation time in the first 3 months of the year.
Carrying over vacation time often requires manager or HR approval. This helps prevent situations where multiple employees request extended time off at the same time. Employers may also encourage employees to take their vacation regularly to support employee well-being and reduce burnout.
Is unlimited vacation legal in Canada?
Yes, unlimited vacation is legal in Canada. No law sets a maximum amount of vacation time an employer can grant employees. While it's not common, there are some employers who offer unlimited vacation time. How this works can vary by the employer.
Can you have a use it or lose it vacation policy in Ontario, Canada?
Ontario does not allow employers to have a strict "use it or lose it" policy for the minimum statutory vacation time. Unused minimum vacation time must be paid out or carried forward. It is the employer's responsibility to ensure it's taken.
However, for any extra vacation time beyond the legal minimum, a "use it or lose it" policy might apply if clearly stated in an employment agreement.
Here are the rules for statutory vacation entitlement in Ontario as set out under the Employment Standards Act (ESA):
No forfeiture: Employees cannot lose their minimum 2 weeks (or 3 weeks after 5 years) of vacation time or pay.
Employer's duty: The employer must ensure the minimum vacation is taken within 10 months of the entitlement year's end.
Payout or Carry-Over: If not used, the employer must either pay it out or carry it forward.
Vacation accrual and carryover rules by province
Your amount of vacation time, how quickly you accrue it, and if you can carry over vacation days vary based on where you work within Canada. Each province has its own rules, but they are similar across the country.
Here’s an overview of the vacation accrual and carryover rules by province:
Alberta, BC, Manitoba, NWT, Nunavut, Ontario, PEI, Yukon: 2 weeks (4%) after 1 year; 3 weeks (6%) after 5 years (NWT/Nunavut 6+ yrs).
New Brunswick, Nova Scotia: 2 weeks (4%) after 1 year; 3 weeks (6%) after 8 years (NS) or 8 years (NB).
Newfoundland & Labrador: 2 weeks (4%) for up to 15 years; 3 weeks (6%) after 15 years.
Quebec: 1 day/month (max 2 weeks) for under 1 year; 2 weeks (4%) after 1 year; 3 weeks after 3 years (6%).
Saskatchewan: 3 weeks (5.77%) after 1 year; 4 weeks (7.69%) after 10 years.
Additional carryover rules in Canada
- All provinces require unused earned vacation pay to be paid out when employment ends.
- Saskatchewan mandates payout of unused vacation within 11 months of the entitlement date.
- Ontario and Quebec allow for agreements to carry over time, but often with limits.
- Federally regulated vacation rules: Standard rules (2 weeks after 1 year of service, 3 weeks after 5 years, and 4 weeks after 10 years). Agreements possible for splitting/carrying over.
A final word about vacation accrual & carryover rules in Canada
Vacation accrual and carryover rules in Canada vary by province and depend on both legislation and employer policy. While all employees are entitled to minimum statutory vacation time, how that time is earned, carried over, or paid out is shaped by where you work and the terms of your employment agreement.
Employers cannot require employees to forfeit their minimum legal vacation entitlement, but they can place reasonable limits on additional vacation time.
If you are an employer setting policies, understanding your provincial requirements can help ensure compliance, prevent misunderstandings, and support a healthier work–life balance for everyone.
Want to simplify vacation tracking and stay compliant across Canada? Reach out to our team of HR experts that can help you manage vacation accrual, carryover, and payouts.
Ashley Thiel is a seasoned Human Resources professional and educator with over 17 years of experience in HR management, employee relations, and organizational development.
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