What Happens to Unused Time Off?

woman sitting on blanket near sea and mountain during dawn
by Advice Chaser
by Advice Chaser

As we approach the end of the year, many employees are starting to ask the question: what do I do with my unused time off?

The answer will depend on your employer’s policies. Some will let you roll the unused time over to next year, when (hopefully) you’ll be more able to take a vacation. Some give you a payout for the time you didn’t take. And in some, you will lose whatever you don’t use. Make sure you know what your employer’s policies are so that you can plan accordingly.

woman sitting on blanket near sea and mountain during dawn

Vacation Time, Sick Days, and Paid Time Off

At most full-time jobs, you can take days off without losing pay. You can take a sick day, which doesn’t require advance notice (since you can’t know when you will be sick). Or you can plan ahead to be out for a certain number of days for a vacation. In some offices, these two reasons for paid days off fall under different rules. You might accrue one vacation day and half a sick day per month, for instance.

Other employers group sick days and vacation days together into paid time off (PTO). You will accrue a set number of days and can use them however you want, whether you’re sick, need to take the car to the mechanic, or want to take a trip.

There are no federal laws governing time off, how much employers have to provide, or what rules your employer can impose. But many states and cities do have regulations protecting your time off.

Can I Save It Forever?

What if you’re never sick and never take a vacation? Does that time stack up forever? Again, it depends on what your employer will allow.

Some employers do allow you to accrue that time indefinitely. Others put a limit: for instance, you can accrue up to a month of unused time off, but after that, you won’t accumulate any more unless you use some.

But at some employers, the time-off clock resets at the end of every year. Hope you don’t get sick in January! Millions of vacation days are lost every year because people never used them.

You Mean There’s No Reward for Overworking?

At most offices, there is indeed no trophy given for the person who never takes a break and comes in looking like death warmed over rather than calling in sick. You may as well take your days, because they do you no good accruing forever. You’re essentially working for free for some of the year, because you don’t have to work every weekday to receive your salary.

At some employers, however, you will receive a cash payment at the end of your employment to compensate you for the time you didn’t take off. So if you quit or are laid off, you will receive an extra check paying you for your unused time off. In general, your employer would rather not pay this. They’ll urge you to take regular time off instead. But if you’d rather save it up and get a payout, that’s up to you.

In cases where your paid time off only accrues up to a limit, or where it resets at the end of the year, you have a strong motive to use it. If you don’t, you lose it, so that when you’re feeling overworked and burned out, it won’t be there. If you work for an employer who resets time off at the end of the calendar year, you have two months to use it up. Can’t take a trip? Consider a cozy staycation, time with family, or just some days to fix up the house or finally make that annual doctor’s appointment.

Find Out Your Options for Unused Time Off

If you don’t know what rules govern paid time off at your company, now is the time to ask. Make sure to request time off far in advance. Busy seasons like Christmas and summer get booked up fast, and your employer might not let multiple people take time off at the same time.A financial advisor can help you navigate the benefits at your workplace. Contact us today to connect with the right advisor for you.

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