Vacation days are days for which an employee is paid when time is taken off from work. As a result, organizations provide paid time off (PTO) to employees as a benefit. Usually, this benefit fits into the comprehensive compensation package. 

Typically, organizations that provide vacation days correlate them with tenure. This means that the number of years the employee has worked within the company sometimes determine their allotment. For example: 

1 year: 5 days

2-5 years: 8 days

6-10 years: 12 days

11+ years: 16 days

Most importantly, the Fair Labor Standards Act (FLSA) does not require employers to pay for time not worked. Therefore, employees who take vacation days aren’t legally entitled to pay for their time away from work. 

In short, vacation pay is an agreement between an employer and employee that determines the number of paid days away from work that one is entitled to.

Depending upon the agreement in place between the employer and employee, some require their employees to use their vacation days during a specific time period. Some call this a “use it or lose it” policy. Moreover, other agreements may allow the employee to roll over unused vacation days to future years.

Related Terms: Floating Holidays