Update to the public service employee annual leave cash-out process

Update to the public service employee annual leave cash-out process

April 17, 2026 - Defence Stories

Estimated read time - 1:18

The mandatory cash-out of excess vacation and compensatory leave for public service employees has concluded. This measure, implemented by the Treasury Board of Canada Secretariat (TBS), was in effect from March 31, 2022, to March 31, 2026.

As part of this initiative, employees were advised that any vacation or compensatory leave balances exceeding the allowable carry-over limits set out in their collective agreement would be automatically paid out as of March 31, 2026. These annual cash-outs, introduced in 2022, were intended to gradually reduce the accumulation of excess leave balances across the public service.

What's next

As of April 1, 2026, the annual leave cash-out provisions will resume as they are outlined in relevant collective agreements and/or terms and conditions of employment.

Reminder: Employees continue to have the option to request a cash-out of their excess leave at any time, subject to relevant collective agreement conditions.

Employees in receipt of a mandatory cash-out in 2026

As of March 31, 2026, employees who had a vacation or compensatory leave balance higher than the allowed carry-over amount as stipulated in your collective agreement can expect a mandatory cash-out as follows:

• Vacation leave cash-out payments will be issued by June 30, 2026.
• Compensatory leave cash-out payments will be issued at the time prescribed in the relevant collective agreement and/or terms and conditions of employment.

Note: Due to carry-over regulations, all excess leave has been removed from employee leave balance in the Human Resources Management System.
Leave cash-out payments are subject to income tax. To learn more about tax implications, consult the Vacation and compensatory leave cash-out page (available only on the National Defence network), or contact the Canada Revenue Agency or Revenu Québec.

Contact

For general questions about leave cash out, contact HR Connect RH or call 1-833-747-6363.