Vacation Pay, Sick Pay, Holiday PayThere are potentially two major questions to be resolved on the issue of vacation pay: Show
If it is determined that the vacation payments are not wages, then the question of allocation of the vacation payments is, of course, immaterial. A. Vacation Pay as WagesSection 1265.5 of the Code provides as follows: "Notwithstanding any other provision of this division payments to an individual for vacation pay which was earned but not paid for services performed prior to termination of employment, shall not be construed to be wages or compensation for personal services under this division and benefits payable under this division shall not be denied or reduced because of the receipt of such payment." Vacation payments may or may not be considered wages for UI purposes, depending on whether the payments are made as a result of a "termination of employment" as used in Code Section 1265.5. When an individual ceases work for the purpose of taking a vacation and is due back at work on a specific date following the vacation, no termination has occurred. When an individual receives vacation pay because of a quit or discharge which clearly terminates the employment relationship, the payment is not wages. When vacation pay is made as a result of a layoff, it must be determined whether there has been a termination of employment i.e. a break in the employment relationship.
B. Allocation of Vacation PayOnce it is determined that the vacation pay at issue is wages, then the question of the allocation of the vacation pay must be resolved. The question of allocation is immaterial if the vacation pay is not considered wages.
C. Pay In Lieu of VacationThis is a payment for vacation credit earned with no scheduled vacation time off taken. It is, in effect, a bonus for working and not taking a vacation. Accordingly, since it is in the nature of a bonus, it is allocable to the period earned. Example: An employer in a seasonal industry normally operates from March 1 through November 30 of each year. The employees are expected to work continuously during the period the plant is open. The collective bargaining agreement provides that vacation credit is earned based on seniority and the hours worked during the prior calendar year. The employer computes the amount of the vacation pay and on February 1 makes the vacation payment to its employees; however, the contract makes no provisions for the actual taking of a vacation. The payment made is considered to be a pay in lieu of vacation payment. As indicated by the above example, this type of plan may be found in a seasonal industry where the employer has a plant closure of a relatively long duration. In other instances, a pay in lieu of vacation provision may be included in a contract whereby an employee may actually take a vacation for part of the vacation credit earned and take a "pay in lieu of vacation" for the remaining period. In some cases, a collective bargaining agreement may give the employer the authority to cancel an employee's planned vacation, usually due to economic conditions, and the employee is then paid his vacation but continues working. Sick Pay Section 1265.7 of the Code provides, in pertinent part, as follows: ". . . payments to an individual for sick pay which is earned but not paid for services performed prior to termination of employment, shall not be construed to be wages or compensation for personal services under this division and shall not be denied or reduced because of the receipt of such payments." Accordingly, as in vacation pay, the critical factor on whether or not sick pay is wages is whether the claimant has been terminated from employment. "Termination" in this context means a leaving of work due to an indefinite layoff, quit, discharge, etc. The same criteria used in vacation, as discussed earlier in this section, applies to sick leave pay in determining whether or not there has been a termination of employment. If there has been a termination of employment then the sick pay would not be considered wages. Holiday Pay
What is a paid leave called?– Paid Time Off (PTO). Companies often use PTO which combines sick leave and vacation time in one. – Bereavement Leave (funeral leave). Leave for grieving and taking care of personal matters after a close family member passes away. – Leave of Absence (Paid).
Is vacation a type of leave?The most common types of leave that employers offer are vacation, paid sick leave and PTO. While the terms are sometimes used interchangeably in employee discussions, there are specific differences between the types of leave.
What is time off from work called?Paid time off (PTO) is a human resource management (HRM) policy that provides employees with a pool of bankable hours that can be used for any purpose. Also known as personal time off, the acronym PTO is generally used to describe any period of time that an employee is paid while taking leave from work.
Which of the following are examples of paid leave benefits?Vacation, holiday, severance, or sick pay. Meal or rest periods, holidays off, or vacations. Premium pay for weekend or holiday work. Pay raises or fringe benefits.
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