Payment for Vacation, Holiday, and Sick Leave Upon Termination?

June 8, 2011, 11:16 AM

Employees who resign or are terminated often demand payment for unused vacation, holiday, and sick time. Importantly, no Virginia or federal statute requires that an employer provide fringe benefits of any kind, including payment for these unused benefits upon termination.

However, if an employer agrees to pay for these benefits upon termination, the employer may be liable under a contract theory. By way of example, an employer may agree to pay for these benefits upon termination in any written policy, handbook, offer letter, or employment agreement. An employer may also inadvertently agree to pay for these benefits upon termination by inartfully drafting any such documents. Similarly, an employer may bind itself to pay for these benefits upon termination by establishing a pattern or practice of doing so.

Employers should review their written policies to ensure that they are consistent with intended company policies. Employers should also review their procedures for paying terminated employees, to confirm that they are consistently applying company policy. --David J. Sullivan