Can an employment separation agreement legally deny owed vacation pay?

Asked on November 11, 2011 under Employment Labor Law, New Jersey


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Yes, so long as the employee agrees to this and signs or executes the agreement.

A separation agreement is a contract; the two parties, employer and employee, may agree to anything not inherently illegal (e.g. no agreement to commit tax fraud). A party may agree to give up compensation which it has otherwise earned or is entitled to--nothing requires an employee to accept all pay or other benefits if he or she does not want to. Therefore, the employee may agree to give up the vacation pay, and the employer may ask him or her to do this. Presumably, the total severance package makes it "worth the while" for the employee to do so, otherwise he or she would not sign it.

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