Sample of Employee Severance Package (continuation)
Unused Leave Credits
Basically, there are no federal requirements for the payment of sick leave and vacation leave credits; hence the employer has the option whether or not to include unused sick leave credits as severance pay. Still, the payment of those credits will depend on the company’s policies.
The Family and Medical Leave Act ‘s (FMLA) rules pertain to mandatory paid sick leave credits if the employee’s reasons fall under any of the conditions specified in the FMLA. These rules refer to usage and their mandatory nature as paid sick leave.
Generally, vacation leaves require one year of service for eligibility and are usually equivalent to 40 hours or one week of paid time away from work.
However, some employers discourage the accumulation of sickness and vacation leaves and instead require their employees to exhaust these leaves yearly; otherwise, a one-week paid vacation benefit will be forfeited. Some companies maintain that the benefits of these leaves should be properly utilized as a way of keeping their human resources fit and healthy. This way, problems about long-term disability could be minimized if not eliminated. This, of course, should be so stated in the company’s policies in order to be enforceable
Companies that require the exhaustion of sick and vacation leave will pay only the current year’s unused sick and vacation leave credits, in full or prorated, if the resignation, retirement, or separation takes place before the year ends.
Some employers, however, prefer that employees report for work continuously to avoid absenteeism and the hassles of filling vacancies, albeit temporarily. As incentive, unused sick and vacation leaves can be accumulated up to a maximum amount and are commutable to cash upon separation from the company.