Does your company pay out accrued sick leave at termination?

Question: “I work for an engineering/environmental consulting firm. We currently have accrual limits for vacation and sick leave. Employees accrue six days of sick leave per year, and the limit is 240 hours (one month). At no time shall the total accrued vacation time exceed two times the employee’s annual vacation benefit. We do pay out half of accrued sick leave hours at the time an employee terminates. I am interested in hearing how other firms handle vacation and sick leave accruals, and if accrued sick leave hours are paid out at termination.” — Peggy


Our company only pays out vacation time at termination. We have a cap of 240 hours as well for the accrual of sick time, but this is not paid out at termination.

We pay out only vacation time, no sick time upon termination.

In my organization, accrued vacation time is based upon years of service. Employees may accrue up to 240-hours annual leave. In the first payperiod of each year, any time over 240 hours is converted to sick leave. There is no limit on accrued sick leave; however, accrued sick leave counts toward longevity for retirement purposes. If an employee leaves, they are paid any accrued annual leave but they are not paid accrued sick leave. If they are vested in the retirement system (5-years) then any accrued sick leave is added to years of service to compute retirement benefits.

Our company has a maximum accrual for both vacation and sick time. Vacation (called PTO – Paid Time Off – and lumped in with holidays) is based on years of service and status, and equal to 1 1/2 times the annual accrual level. Payout is also based on years of service, with 80% being the max except in the event of death. Maxed out PTO time will go into sick time until that is maxed out also. Sick time (called STD – Short-Term Disability – also used for FMLA) is accrued at .0231 for hours paid and you must be at least half time. The max is 480 hours for full-time employees and 240 for half-time employees. You have to be off work for three consecutive days or 24 consecutive working hours before you can use STD with a couple exceptions. There is NO payout of STD time at termination of employment.

Our company has no cap as to the number of sick hours that can be accrued and upon retirement it pays a percentage based on the years worked. We have several employees that have well over a thousand hours of accrued sick leave that they plan to “sell back” upon their retirement.
Vacation has an accrual cap and is paid out at full value upon retirement.

We pay out at termination only vacation time

At our agency, we have 8 paid holidays per year plus Paid Time Off (PTO) is accrued on a per-paid-hour basis. An employee must be paid for at least 40 hours in a pay period to receive PTO accrual (accrual stops once 80 paid hours are reached for the pay period). The accrual rate is based on position (executive, exempt, salaried non-exempt and hourly) and length of service with the agency. PTO can be used for vacation or illness. Only 208 hours of PTO can be carried over at the end of our fiscal year or staff lose any hours in excess of 208 hours.

Upon termination of employment, employees with unused PTO time are awarded payment at the ending hourly salary for each unused hour based on the schedule below:

Consecutive Months Hours Paid
0 – 35 months No payment
36 – 47 months 20% of accrued hours not to exceed 40 hours
48 – 59 months 40% of accrued hours not to exceed 80 hours
60 – 71 months 60% of accrued hours not to exceed 120 hours
72 – 83 months 80% of accrued hours not to exceed 160 hours
Over 83 months 100% of accrued hours not to exceed 200 hrs

If an employee resigns his/her position with the organization, PTO may not be taken during the final four (4) weeks of employment or in place of notice of termination.

In my company, vacation time is counted as ‘earned’ and sick pay is not earned. Therefore, vacation time is paid out upon termination and sick pay is not.

We are a bit different in that we offer only PTO (paid time off) which includes any time off. At the end of the year we do pay out and employees can keep 80 hrs on the books as roll over.

My agency combines sick and vacation time into an ETO bank. Employees with over one year accrue 33 days per year; those with ten years or more get 38 days. The ETO bank’s limit is 840 hours; if that is reached, you just stop accruing. Employees also have the option of “cashing out” ETO quarterly but no more than 160 hours a year with some other stipulations as well. All hours in the ETO bank at termination are paid out as long as the employee leaves on good terms.

My company will pay back up to seven days of PDO (Paid Days Off) at the end of the year (December)

We pay out earned vacation time as required by state law, but we do not pay out earned sick time.