Vacation Pay in Québec (2026): 4% or 6%, Holidays and Termination

Vacation pay is one of the most common payroll errors we see in Québec small businesses. The rules look simple (4% or 6%), but the details trip people up: which year of service counts, what happens to a new hire, whether you can add 4% to every paycheque, what you owe when someone quits, and how holidays and vacation interact. This guide covers the minimum standards in the Act respecting labour standards (the LNT, administered by the CNESST) as they read on November 9, 2026, with worked calculations, plus the payroll tax side and a short section on federally regulated employers. Collective agreements, decrees and employment contracts can give more, never less.

How much vacation pay do you get in Québec?

The percentage depends on your continuous service with the same employer at the end of the reference year, not on your age or job title. The LNT sets three tiers:

A few points that are often missed:

• There is no 8% tier in Québec’s LNT. Four weeks at 8% exists for federally regulated employees after 10 years (see below), and many Québec employers offer it by contract, but it is not a provincial minimum.
• The 6% rate starts at 3 years, measured at the end of the reference year. An employee who reaches 3 years of service on May 15, 2026 is still at 4% for the reference year that ended April 30, 2026, and moves to 6% for the year ending April 30, 2027.
• The third week for 1 to 3 years is unpaid. Section 68.1 lets an employee with 1 to 3 years ask for extra unpaid days to bring the leave to three weeks. The vacation pay stays at 4%.
• Part-time, temporary and student employees have the same rights. The percentage applies to whatever they earned, so a part-time employee simply gets a smaller dollar amount. Section 77 excludes a few groups from the vacation rules, such as students employed in a summer camp or a non-profit social or community organization.

What is the vacation reference year in Québec?

The reference year is the 12-month period during which the employee earns the right to vacation. Under section 66 of the LNT it runs from May 1 of the previous year to April 30 of the current year, unless a collective agreement or decree sets another starting date. Many employers also use their own fiscal or calendar year in practice; if you do, make sure the result is never less generous than the May-to-April rule.

Vacation earned during a reference year must be taken in the 12 months that follow (section 70). For the reference year May 1, 2025 to April 30, 2026, employees must take their leave by April 30, 2027. Other timing rules from the Act:

• The employee has the right to know the vacation dates at least four weeks in advance (section 72).
• The employee may ask to split the leave into two periods; the employer can refuse only if it closes for a period at least as long as the employee’s vacation (section 71).
• The employer cannot replace the vacation with money (section 73), unless a collective agreement or decree provides otherwise. Paying the 4% and keeping the employee at work all year does not satisfy the Act.
• Vacation can be carried over to the following year only if a collective agreement or decree allows it, or if the employee is absent for illness, accident or another reason listed in the Act, or on family or parental leave, at the end of the 12-month period (section 70). In that second case the employer may refuse the carry-over, but must then pay the indemnity.

How do you calculate vacation pay in Québec?

Multiply the employee’s gross wages earned during the reference year by 4% or 6%. Gross wages generally means everything earned as pay for work during that year. Whether a particular item, such as a discretionary bonus, belongs in the base depends on its nature; when in doubt, check the CNESST’s guidance or ask us before you run the payroll.

Example 1: two years of service

Julie was hired on September 1, 2023. On April 30, 2026 she has 2 years and 8 months of service. Her gross wages from May 1, 2025 to April 30, 2026 were $48,000.

• Tier: 1 to less than 3 years, so 2 weeks of vacation.
• Vacation pay: $48,000 × 4% = $1,920.
• If she asks, she can take a third week, unpaid.

Example 2: five years of service

Marc has worked for the same company since 2021. His gross wages for the reference year were $62,000.

• Tier: 3 years or more, so 3 weeks of vacation.
• Vacation pay: $62,000 × 6% = $3,720, about $1,240 per week of leave.

Example 3: a new hire in the "stub" year

Sara started on November 1, 2025. On April 30, 2026 she has 6 complete months of service and earned $21,000.

• Vacation: 1 day per month = 6 working days (the two-week cap does not bite).
• Vacation pay: $21,000 × 4% = $840.
• For the next reference year (May 1, 2026 to April 30, 2027), she will have 1 year and 6 months of service at the end, so she will get 2 full weeks at 4%.

Example 4: an employee who was off sick part of the year

Section 74 protects employees whose vacation pay shrinks because of certain absences, such as illness, an accident or maternity leave. Instead of the percentage, they get two or three times the average weekly wage earned during the period they actually worked, whichever gives the employee more.

Louis has 4 years of service (3 weeks). In the reference year he worked 40 weeks, earned $40,000, and was off sick for 12 weeks.

• 6% method: $40,000 × 6% = $2,400.
• Average weekly wage: $40,000 ÷ 40 = $1,000. Three times that: $3,000.
• Louis is entitled to $3,000.

The protection covers absences for the reasons listed in section 79.1 (illness, accident and similar reasons) and maternity or paternity leave, and the total cannot exceed what the employee would have received without the absence (section 74, last paragraph). The CNESST publishes worked examples for a 26-week sick leave and for a maternity leave. Get these files reviewed; they are the ones most often challenged.

Can vacation pay be paid on every paycheque in Québec?

This is the most searched question on the topic, and the answer is narrower than many payroll setups assume. Section 75 says the employee receives the vacation indemnity in a single payment before the vacation starts, or according to the rules for the regular payment of wages (in practice, with the pay that covers the vacation period). The Act allows the indemnity to be added to each pay only in two situations:

• a collective agreement or decree provides for it; or
• the seasonal or otherwise intermittent nature of the employer’s activities justifies it. The CNESST gives tourism, agriculture and fisheries as examples.

Outside those cases, adding 4% to every cheque for a regular, year-round employee creates two problems. First, the employee still has the right to the actual time off, and section 73 forbids replacing leave with money. Second, the employee who takes two weeks off then has no income for those weeks, which is exactly what the Act tries to prevent. Some contracts say otherwise; a contract cannot lower a labour standard.

Construction workers covered by the construction decree have their own vacation system administered by the Commission de la construction du Québec (CCQ). Those rules are outside this guide.

What vacation pay is owed when an employee quits or is dismissed?

Section 76 applies whenever the employment contract ends before the employee has taken all the leave they were entitled to, whether they resign, are laid off or are dismissed. The employee must receive:

1. the vacation pay for any leave already earned but not taken (from the reference year that ended on April 30); and
2. 4% or 6%, as applicable, of the gross wages earned in the current reference year, from May 1 to the last day of work.

Example 5: resignation in September

Nadia has 4 years of service and resigns effective September 30, 2026. She did not take her vacation for the reference year ended April 30, 2026, when her gross wages were $55,000. From May 1 to September 30, 2026 she earned $23,000.

Pay it with the final pay and show it on the final pay slip. The amount is reported on the T4 and RL-1 for the year it is paid, and on the record of employment. Our Québec payroll checklist covers the rest of the offboarding steps.

How does holiday pay work in Québec? The 1/20 rule

Québec has eight statutory holidays: seven under section 60 of the LNT and the Fête nationale (June 24) under the National Holiday Act.

For each holiday, the employer pays an indemnity equal to 1/20 of the wages earned during the four complete pay weeks before the week of the holiday, excluding overtime (section 62). For employees paid wholly or partly on commission, it is 1/60 of the wages earned in the 12 complete pay weeks before the holiday week. The Fête nationale uses the same formulas, and tips declared or allocated under the Taxation Act count in the base.

Example 6: holiday pay for a part-time employee

Kevin works irregular hours. In the four complete pay weeks before the week of Labour Day he earned $1,600 of regular pay and $200 of overtime.

• Base: $1,600 (overtime excluded).
• Holiday pay: $1,600 ÷ 20 = $80, whether or not Labour Day was one of his usual workdays.

Other holiday rules:

• No minimum service. An employee qualifies from the first day of work. The only condition is not to be absent without the employer’s authorization or a valid reason on the working day before or after the holiday (section 65).
• If the employee works the holiday, the employer pays the wages for the work plus the holiday indemnity, or gives a compensatory day off, generally within three weeks before or after (section 63).
• If the holiday falls during the employee’s vacation or on a day they do not normally work, the employer pays the indemnity or gives a compensatory day on a date agreed with the employee (section 64). That is how the Saturday Christmas of 2027 is handled.
• Holiday pay is part of the gross wages on which vacation pay is calculated.

Is vacation pay taxable, and how does it appear on the T4 and RL-1?

Yes. Vacation pay is employment income. It is taxed in the year it is paid, not the year it was earned, and it is subject to the same source deductions as salary.

Which withholding method do you use?

The method depends on how the vacation pay is paid:

• Paid while the employee is on vacation: calculate EI and pension contributions as for regular salary. For income tax, the CRA says to use the table for the vacation period if you pay vacation separately, or the regular pay-period table if you include it with other earnings. Revenu Québec gives specific shortcuts: for 4% vacation pay use its 27- or 26-pay-period schedules; for 6%, divide the vacation pay by 3, use the 52-period schedule and multiply the weekly deduction by 3.
• Paid on each cheque, or paid out without the employee taking vacation: the CRA says to use the bonus or irregular-payment method for income tax and pension contributions, and the regular method for EI. Revenu Québec says to use the method that applies to gratuities.
• Vacation pay paid into a trust (some sectors use one) is taxable to the employee in the year the employer pays it into the trust.

Most payroll software handles this automatically if the vacation pay is coded correctly. The usual error is coding it as a non-taxable reimbursement or forgetting to include it in total payroll for the health services fund rate. Our guides to T4 boxes and RL-1 boxes show where each amount goes.

Employees of federally regulated businesses

Banks, telecommunications companies, airlines, interprovincial trucking and a few other sectors are governed by the Canada Labour Code, not the LNT, even when the employee works in Montréal. The federal minimums are different:

Under the Code, vacation must begin no later than 10 months after each year of employment, and the employer must give at least 2 weeks’ notice of the dates. There are 10 general holidays, including the National Day for Truth and Reconciliation (September 30), Remembrance Day and Boxing Day, and general holiday pay for most employees is at least 1/20 of wages, excluding overtime, earned in the 4 weeks before the week of the holiday. Federally regulated employers in Québec still withhold Québec income tax, QPP and QPIP, because those follow the employee’s province of employment, not the labour law that applies.

Common vacation pay mistakes

• Using the employee’s current hourly rate. Vacation pay is a percentage of what was actually earned in the reference year, including overtime and holiday pay, not hours times today’s rate.
• Switching to 6% on the 3-year anniversary. The tier is set by service on April 30 (or your other reference date), not by the anniversary date.
• Adding 4% to every cheque for full-time staff without a collective agreement, decree, or a seasonal or intermittent activity that justifies it.
• Letting vacation lapse or paying it out instead of giving the leave. Untaken vacation does not disappear; it becomes a payable on departure, and cashing it out is generally prohibited.
• Forgetting the current-year portion on termination. Departing employees get both the untaken leave and 4% or 6% of wages since May 1.
• Ignoring the absence rule. After a long sick leave, compare the percentage with two or three times the average weekly wage.
• Paying holiday pay only to full-time staff. Part-time employees qualify from day one under the 1/20 formula.
• Not accruing the liability. Earned but unpaid vacation pay is a real liability at year-end; record it in the books so your financial statements and month-end close are accurate.

How we can help

We run payroll for Québec employers, set up vacation and holiday accruals correctly in QuickBooks Online and payroll software, calculate final pays, and file the T4 and RL-1 slips at year-end. Our payroll service starts at $75 a month for 1 to 5 employees, and bookkeeping plans cost $350, $650 or $1,100 a month. See pricing, or contact us with a recent pay register and we will check your vacation and holiday calculations. Hiring help that may not be an employee? Read our guide to employee or independent contractor status in Québec.

Frequently asked questions

Sources

• Légis Québec – Act respecting labour standards (N-1.1), sections 60 to 77
• Légis Québec – National Holiday Act (F-1.1)
• CNESST – Vacances annuelles
• CNESST – Statutory holidays
• Revenu Québec – Vacation pay (source deductions and employer contributions)
• CRA – Vacation pay and public holiday payments
• Government of Canada – Annual vacations and general holidays (federally regulated employers)

Keep reading

• How to Do Payroll in Québec (2026): Steps and Real Employee Cost
• T4 slip explained box by box (2026)
• Relevé 1 (RL-1) explained box by box (2026)