The term vacation pay refers to a benefit that allows an employee to take a day off from work and receive compensation. The terms and conditions of a company's vacation pay program are typically outlined in a policy statement or a collective bargaining agreement.
While federal laws such as the Fair Labor Standards Act do not require employers to compensate employees when they are not working, many employers do provide their full-time employees with vacation pay. A collective bargaining agreement will outline this benefit for unionized workers, while a policy statement may apply to non-represented employees.
Within these agreements companies may place restrictions on the use of vacation days, for example:
The number of days an employee receives each year, referred to as their allotment or quota, is normally a function of the years of service with the company. For example, a new employee may be entitled to five vacation days, while an employee that has been with the company for 30 years might receive four weeks of vacation pay each year.
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