How to Handle Vacation Time in Your Home Daycare

If you run a home daycare, you’ve probably had this thought: “Am I allowed to take a vacation? And do families still pay?”

The short answer is yes — and yes. But how you set it up in your contract makes all the difference between smooth sailing and awkward text messages from parents.

This guide walks through the most common approaches home daycare providers use, what to put in your contract (and what language to avoid), and how to communicate your policy so everyone’s on the same page before it becomes a problem.

You’re Running a Business, Not Asking for a Favour

First, let’s get this out of the way: whether you’re licensed through an agency or operating independently, you are a self-employed business owner. You set your own rates, your own hours, and your own policies — including vacation.

Centres close for holidays and PD days all the time. Parents pay anyway. Yet when a home provider takes a week off, it somehow becomes controversial. It shouldn’t be. You’re providing a spot in your program, not billing by the hour like a plumber.

The key is making your vacation policy clear from day one so no one is caught off guard.

The Three Main Approaches

There’s no single right answer here. Most providers use one of these three models — each with trade-offs worth thinking through.

1. Full Rate — “You’re Paying for the Spot”

This is the most common approach among established providers. Parents pay their regular rate whether the daycare is open or closed, whether it’s your vacation or theirs.

The logic is straightforward: families are paying to hold a spot in your program. You can’t fill that spot for a week and then give it back. The cost of running your home — rent or mortgage, insurance, supplies — doesn’t pause when you take time off.

This works well when you limit your closures to a reasonable number of days per year (most providers take one to three weeks total, including holidays) and give families plenty of advance notice.

2. Discounted Rate — “Meet in the Middle”

Some providers charge a reduced rate — often 50% — during their own vacation weeks. The thinking is that it softens the impact for families who now need to arrange backup care while still covering your fixed costs.

A common variation: full rate when the family takes vacation (since the spot is still available), discounted rate when you close. This feels fair to a lot of families and is a reasonable middle ground, especially when you’re building your client base.

3. Unpaid Closures — “I Don’t Work, You Don’t Pay”

Some providers, particularly those just starting out, choose not to charge during their own vacation time. This can make your program more attractive to new families, but it comes at a real cost — literally. If you care for four children and take two unpaid weeks off, that’s a significant chunk of your annual income gone.

If you go this route, make sure your daily or weekly rate accounts for it. As one experienced provider put it: the cost of your time off is built into your rates one way or another. The only question is whether it’s visible on the invoice or baked into a higher daily rate.

Don’t Forget: Provider Vacation and Parent Vacation Are Two Separate Policies

This is where a lot of contracts fall short. You need clear terms for both scenarios:

When you close for vacation: How many weeks per year? How much notice will you give? Is it full rate, reduced, or unpaid?

When a family is away: Do they still pay? (In almost all cases, yes — you’re holding their spot.) Do they get any free weeks per year? If so, how much notice do they need to give?

A common and fair structure: parents pay full rate whenever the daycare is open, regardless of whether their child attends. The provider takes a set number of closure days per year at full rate with 30 days’ notice or more. Each family gets one week per year where they don’t pay — as long as they give at least four weeks’ notice.

Whatever you decide, put both policies in the same section of your contract so there’s no confusion.

The Tax Language Trap: Why “Paid Vacation” Can Cost You

This is the part most providers don’t know about, and it’s important.

As a self-employed home daycare provider, you are not an employee of the parents. But if your contract uses language like “paid vacation” or “paid sick days,” it can create problems during a tax audit. Those are employment terms.

In Canada, if the CRA sees that language in your agreement, they could determine that an employer-employee relationship exists — which means the parents might owe CPP and EI contributions on your behalf. CRA can look back up to seven years.

In the US, the IRS applies a similar test. Using employment language in your contract can blur the line between independent contractor and employee, potentially triggering payroll tax obligations for the parents and penalties for both sides.

The fix is simple: use the term “paid by enrollment” instead. Your contract should say something like:

“Payment is expected for all agreed-upon days whether the child is in attendance or not. Fees do not vary due to holidays, closures, illness, or family vacations.”

This language makes it clear that families are paying for a spot in your program on an ongoing basis — not paying you a salary with benefits. It protects both you and the parents.

What to Include in Your Contract

Your vacation policy section should cover the following. Keep it specific — vague policies lead to disputes.

Your closures: State the number of days or weeks per year you will be closed, whether that includes holidays or is in addition to them, and how far in advance you’ll communicate specific dates. Most providers send an annual closure calendar in January.

Payment during closures: Spell out the rate — full, reduced, or zero — for days you’re closed. Don’t leave it implied.

Family absences: State that regular fees apply when the child doesn’t attend (illness, appointments, family vacation). If you offer any free absence days per year, specify how many and what notice is required.

Notice requirements: How much notice for your own closures? (Two to four weeks minimum is standard.) How much notice for a family vacation? (Two to four weeks is common.)

Holidays: List the specific days you’ll be closed. Don’t just say “all stat holidays” or “all federal holidays” — spell them out so there’s no debate about whether days like Boxing Day, Easter Monday, or the day after Thanksgiving count.

How to Communicate Your Policy

Having a good policy on paper is half the battle. The other half is making sure families actually understand it before they sign.

During enrollment: Walk through your vacation policy in person. Don’t just hand them the contract and hope they read it. Spend two minutes explaining the reasoning: “I take two weeks per year so I can recharge and provide the best care for your child. Here’s how billing works during that time.”

Annual calendar: At the start of each year, share a calendar showing all your planned closures. This gives families months to arrange backup care and eliminates the surprise factor.

Ongoing communication: Give a reminder two to four weeks before each closure. A quick message — “Just a reminder, I’ll be closed the week of August 11th” — goes a long way toward keeping the relationship smooth.

The providers who struggle with vacation pushback are almost always the ones who didn’t communicate clearly upfront. When families know what to expect from day one, it’s rarely an issue.

You Deserve Time Off

Running a home daycare is physically and emotionally demanding. You’re on your feet for 10+ hours a day with no breaks, no coworkers to cover for you, and no separation between your workspace and your home.

Taking time to recharge isn’t a luxury — it’s what allows you to show up as your best self for the kids in your care. Don’t shortchange yourself out of fear that families will leave. A clear, fair, well-communicated policy is a sign of a professional operation, and good families will respect it.

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