Use your excess leave before March 31, 2026

September 15, 2025 – Defence Stories

Estimated read time – 1:30

The Treasury Board of Canada Secretariat lifted the moratorium on the automatic cash-out of vacation and compensatory leave from March 31, 2022, to March 31, 2026 (Accessible only on the National Defence network).

Although leave pay-out is an annual exercise, this year is the last year of the lifting of the moratorium. This means that on March 31, 2026, if you have more vacation or compensatory leave than you’re allowed to carry over (as outlined in your collective agreement), the excess amounts will be paid out in full. This payment will bring your vacation balance down to the permitted amount.

If you have a high leave balance, now is the time to plan and use it.

Taking time away from work offers many benefits and can support a healthy work-life balance. In accordance with operational requirements, employees are expected to use vacation leave during the year in which it is earned.

If you have a high vacation and/or compensatory leave balance:

• Confirm if the leave pay-out applies to you (Accessible only on the National Defence network)
• Consult your collective agreement and terms and conditions of employment to confirm if you are subject to a carry-over limit
• You have the option to request a pay-out (Accessible only on the National Defence network) of your earned but unused leave at any time
• Talk with your manager to know the possible impacts of leave pay-out and to create a leave plan
• Consult an accountant or the Canada Revenue Agency to find out how the pay-out will impact your taxes

Note: Vacation leave planned for the new fiscal year (2026-2027) is not considered in the pay-out calculation. You cannot avoid the pay-out by submitting leave that falls after March 31, 2026.

If you receive a leave pay-out:

• The payment will be subject to income tax
• The payment cannot be cancelled once issued

Contacts:

• If you have questions about your vacation leave balance or scheduling leave, speak to your manager or supervisor.
• For information on tax implications, contact the Canada Revenue Agency or Revenu Québec.
• For general questions about leave pay-out, contact HR Connect RH (Accessible only on the National Defence network) (1-833-747-6363).