How should accrued vacation time be handled at termination?

Ordinarily, accrued vacation pay is paid to a terminating employee. (State law may have something to say about this. Be sure to check State Laws for the law that applies in your state(s).) If there are any types of terminations that would cause the employee to forfeit vacation accrual pay, those circumstances should be clearly communicated.

How does retirement affect accrued vacation? Because seniority often plays a large role in the amount of vacation an employee has, retirees tend to have a large amount of vacation eligibility and accrual. Employers have a number of options:

• let employees take all the vacation as an active employee and still accrue pension credit;

• have the employee take all vacation post-retirement;

• give the employee a lump-sum payment for the extra vacation time; or,

• have the employee forfeit some or all of the vacation time.