If promised, vacation must be granted. Although no Hawaii law requires private sector employers to provide employees with vacations, paid or unpaid, most employers do offer their employees some version of vacation. Thus, 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. Hawaii courts have ruled that, under some circumstances, an employer's assurance of paid vacation time, whether made in an employee handbook, or given orally, or simply understood as a matter of consistent practice, may constitute an implied contract, which is binding and enforceable.
Employee notification. Employers must notify employees, by written notice or posting, about company policies regarding vacation and sick leave.
Accrual method. Employers are free to devise their own system for vacation accrual—for example, on a monthly or pay-period basis, or upon completion of a 6-month or 12-month period. It is important to be clear and unambiguous when drafting such policies. If the policy is intended to ensure that employees work the entire accrual period to earn their vacation days, it should state clearly that employees will not be entitled to pro rata payment if they leave partway through the period. Remember that any vagueness in the policy is likely to be construed against the employer.
Vacation pay due at termination? The Hawaii Court of Appeals, in Arimizu v. Financial Sec. Ins. Co., 5 Haw. App. 106 (Haw. Ct. App. 1984), ruled that vacation benefits are unpaid wages if the employer says that they are. Therefore, whether unused vacation must be compensated at termination depends upon ...