If promised, vacation must be granted. Although no Alabama law requires private sector employers to provide employees with vacations, paid or unpaid, most employers do offer their employees some version of vacation.
It is important for employers to remember that if they “promise” vacation, they may be legally bound to provide it—and that a binding promise does not require embodiment in a formal employment contract. Alabama courts have ruled that, under some circumstances, an employer's assurance of paid vacation time, whether made in an employee handbook or given orally, may constitute an implied contract that is binding and enforceable.
Payment due upon termination. The Court of Appeals in Alabama has ruled that offered vacation time is a form of compensation for services and that once the services are rendered, the right to the promised compensation is vested just as are wages or other forms of compensation.
If it is communicated to employees, an employer may not unilaterally “revoke [its] vacation pay policy once the employees have performed.” Alabama employers that do not wish to pay their employees for accrued but unused vacation must say so specifically and beforehand. To be safe, employers should put their policy in writing and distribute it to all employees or post it conspicuously (Amoco Fabrics v. Hilson et al., 669 So. 2d 832 (1995)).
Accrual method. Employers are free to devise their own systems for vacation accrual. There are several different commonly used options:
• On a monthly basis
• On a pay-period basis
• Upon completion of a 6-month or 12-month period
If the policy is intended to ensure that employees work the entire accrual period to earn their vacation days, it should state clearly that ...