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Are Employers Required to Offer Vacation Leave?

As the summer season gets underway, many employees will be planning to take vacations … and some employers may have questions about their responsibilities concerning vacation leave.

Under Texas law, employers are not required to offer employees vacation benefits, either paid or unpaid. Vacation leave is considered a benefit that the employer may choose to offer as a perk to attract and retain employees, but it is not a legal requirement. Employers who offer vacation leave (paid or unpaid) in writing should  be obligated to comply with employment contracts and/or follow their own vacation policies.

According to the Texas Workforce Commission (TWC), employers who offer vacation leave may establish a policy on how vacation hours are earned, accrued, and used, and whether they will be paid out when not used (such as when an employee leave the company).  Employers may choose to change their vacation leave policies from time to time during employment. As is the case with other employee benefits, employers may not apply vacation leave policies in a way that might be considered discriminatory as defined by law.  

The TWC recommends that a vacation policy include the following elements:

  • Categories of employees who are eligible for vacation leave (e.g. full-time, part-time)
  • How and at what rate vacation leave is earned
  • Whether vacation leave may be carried over from year to year
  • Whether employees will receive pay for unused vacation leave upon separation from the company
  • When vacation leave hours are credited (e.g. monthly or by pay period)

If an employee separates from the company (voluntarily or involuntarily), he or she may be entitled to unused vacation pay if the employer provides this benefit in a written policy or employment contract; however, this payout is not required by Texas law. Employers may limit the amount of vacation leave an employee may accrue over time, and they may attach limitations such as “use it or lose it” vacation leave policies.

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