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Do I Have to Pay a Terminated Employee for Vacation Time Accrued?

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Question: I have a question regarding vacation time being paid to an employee even if he has been terminated. Do you happen to know a case to prove this to be true? I was told from my attorney that the employer is offering a benefit to the employee that can be revoked. Do you also have to pay for all the holidays that they miss also?

Answer: The best practice for employers is to have a written, published policy which makes clear that vacation time does not accrue and is not to be paid out at termination. In some states, unused vacation time is treated as an accrued benefit that has to be paid when an employee leaves an employer. In other states, vacation is not considered as a benefit which accrues if unused and therefore unused vacation need not be paid at termination. Also, under federal law an employer is not required by law to offer vacations at all; the issue here is what can the employer do with unused vacation when an employee leaves or is fired. As for holiday pay, again, a well-written policy which lays out how holiday pay is earned really helps. Generally, there is no obligation to pay for holidays unless company policy provides otherwise.

This response is intended for general informational purposes only and should not be construed as legal advice or a legal opinion, nor is this column a substitute for formal legal assistance. For help with particular legal needs, members are invited to consult with Brooke Duncan III of Adams and Reese LLP. Mr. Duncan can be reached at 504-585-0220 or by email at

There are a lot of qualifying factors here that need to be emphasized in our response to this member. First, the answer to this question is very state-specific so that would need to be taken into consideration if you experience something similar to this scenario. Further, “missed holidays” may be an oxymoron in that while holidays may be offered out by an employer as a benefit of employment, employers are not necessarily “paying” their employees for that time but are simply allowing it as a day not to have to report to work. Was an employee supposed to have to work for a holiday and failed to show up for work? Or did he fail to work the day before and thus lose holiday pay (which some employers do offer.) Be very clear in your policies regarding annual leave and holidays as to what qualifies for a paid workday.

Brooke Duncan

Posted In: Legal

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