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Apr24

Illinois Unused Vacation At Termination

If an employee earns their annual vacation time based on time worked but is allowed to take the full amount including unearned at will any time throughout the year what is due to a terminated employee at time of termination? Do we pay the accrued or accrued plus un earned. Our manual says we pay only accrued but our practice is to allow the employee to use the full amount when ever they want. For Example someone that receives 3 weeks for the year that wanted to take a 3 week vacation in April would be allowed even though they had only accrued 5 days. We would not try to recover the unused portion if th employee resigned in May.

We suggest that you creat an unambigious policy on vacation pay at termination. Otherwise, you face a host of problems including charges of illegal discrimination.

Some employers simply award every employee 3 weeks of earned vacation on January 1. However, you say that you do not follow this policy. 

Illinois law requires that you pay workers for earned vacation at termination. However, it does not require that you pay workers for unearned vacation at termination. In your example, an employee who is terminated in April would be entitled to one week of vacation, not 3 weeks of vacation.

Currently you are allowing employees to take the entire three weeks of vacation in April, then quit, without paying you back for the unearned vacation time. Under Illinois law, you could treat that additional unearned 2 weeks of vacation as an advance on wages, and deduct it from the final paycheck (especially if you had the employee sign a vacation request that specifies this.) Our suggestion is that you implement this policy.

If you do not implement such a policy, employees will very quickly figure out how to play the system and you will discover that every employee who quits has used the full 3 weeks of vacation. Another option, of course, would be to not allow employees to use unearned vacation.

 

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This entry was posted on Saturday, April 24th, 2010 at 4:40 pm and is filed under
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