Can the employer change a long standing vacation policy.

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Can the employer change a long standing vacation policy.

The vacation policy state that after 15 consecutive years of service, 100 of
accrued vacation is payable upon retirement.This policy has not been reviewed
until now and it is around 20 years old. We want to change it and I am not sure
how.

Asked on July 22, 2019 under Employment Labor Law, Tennessee

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 1 year ago | Contributor

Your state (TN) does not specifically require the payment of accrued but unused vacation pay, so this can be changed: you would change it in wrting, with employees acknowledging in writing receipt of the new policy. 
You have to let employees who have earned vacation to date be paid out for those days, if and when they reach retirement and assuming they then had enough years in service, since those days were days they earned according to the existing policy--i.e. it was part of their agreed-upon compensation for the work done up to now by them. But you can in your new policy "freeze" their accrual of days for payout purposes at what they have as of the date of the new policy: i.e. whatever number of days employees have when you put the new policy into effect, that's the maximum number of days they can be paid out for on retirement.


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