Paid Time Off: Everything You Need to Know as an Employer
In 2024, almost three-quarters of employees in Canada reported they were entitled to paid time off (PTO). For employees, PTO is crucial to getting an important break from work—whether for vacation, sickness, or just general ‘life stuff’ that needs to take precedence.
As an employer, offering paid time off doesn’t simply keep you compliant with the law and competitive in the employment market—it gives you a happier, more productive workforce, too.
If you have full- or part-time employees on your books, it’s up to you to offer a scheme that’s not only legally compliant but also supportive and appealing to staff.
In this guide, we’ll talk about the meaning of PTO and how it works.
Key takeaways
- Paid time off (PTO) encompasses various leave types like sickness and vacation, rather than just holiday time.
- Employers must navigate specific federal and provincial laws to ensure their paid time off schemes remain compliant.
- Encouraging employees to take paid time off prevents burnout and boosts engagement, creating a healthier, happier workplace.
- Beyond vacation, paid time off includes diverse benefits like parental, medical, and bereavement leave for your staff.
What is PTO and how is it different from vacation time?
Paid time off isn’t just another term for vacation time—in fact, PTO has a different meaning altogether. As the name suggests, paid time off covers any time when an employee is away from work but still receives pay.
What ties PTO together as an overall system is that it covers leave for a wide range of purposes, including vacation, sickness, maternity, and personal time. Some provinces or businesses may also offer PTO to vote. So, while all vacation is PTO, not all PTO is vacation.
There are a few different schemes to consider, including:
- Unlimited: Employees can take as much PTO as needed, provided the leave is approved by a manager.
- Accrued: PTO is earned over time, based on hours worked, or length of service.
- Fixed: Employees receive a set amount of PTO, usually allocated annually as a fixed sum of days.
Do I have to offer employees paid time off?
In Canada, paid leave is mandated by both federal and provincial law. Across the country, any federally regulated employer must offer employees:
- Two weeks of annual vacation after completing a year of employment
- Three weeks of annual vacation after completing five consecutive years of employment
- Four weeks of annual vacation after completing 10 consecutive years of employment
You are also required to provide vacation pay within 14 days prior to the employee’s scheduled vacation time. This is typically 4% of an employee’s gross earnings for two weeks of vacation, rising to 8% for four weeks of vacation.
Separate allowances for other forms of PTO vary by jurisdiction. It’s worth checking your specific jurisdiction laws to make sure your policy is up to date with provincial law.
Why you should encourage employees to take paid time off
In 2024, the Canadian Psychological Association reported that one in three working-age Canadians were suffering burnout at work, and that 70% of working Canadians said their experience at work affected their mental health.
For employees, burnout can be the result of several factors—excessive workloads, poor support, a lack of control or autonomy over workplace issues, lack of recognition, or unfair treatment.
As an employer, you have a duty of care to protect the health and wellbeing of your staff. And from an organizational perspective, burnout can increase absenteeism, staff turnover, productivity, quality of work, innovation, and engagement. So, looking after your staff with a fair PTO policy will benefit your business as well as your people.
What other types of paid time off are there besides vacation?
PTO covers a range of different types of leave under a single umbrella—giving employers and employees greater degrees of independence, flexibility, and privacy over the reasons for their leave.
As well as vacation time, an employee might use PTO for:
- Maternity leave: Paid and unpaid time after giving birth to recover and care for a newborn
- Parental leave: Parents may share parental leave to allow for greater flexibility
- Medical leave: Time to recuperate from sickness or accidents
- Bereavement leave: Allowing employees privacy and dignity when a loved one dies
- Leave for victims of family violence: Employees are entitled to time off (paid and unpaid, depending on length of service) to seek legal assistance, relocate, or seek medical/psychological assistance and other services
- Personal leave: Covering care responsibilities, family obligations, and urgent situations as prescribed by regulation
Where to find out more about PTO depending on jurisdiction
While some elements of PTO laws are stipulated at a federal level, many vary by province—so it’s important to find which laws apply to your business specifically.
Paid time off FAQs
What is the average amount of PTO in Canada?
A 2024 Experian report found that Canadians take an average of 18 vacation and holiday days per year—eight more than the minimum entitlement.
Which jurisdiction gets the most PTO?
Quebec has the highest rate of PTO entitlement for employees at 79%, almost 15% more than that of Prince Edward Island, which has the lowest rate. Quebec is a clear 8% above second-position Ontario, with 70.8% PTO.
What factors can influence how much PTO you get?
PTO can vary depending on a number of factors, including provincial laws, company culture, and more. Employees also normally get more PTO the longer they work for a company.