Promises must be kept. While no New Jersey law requires private sector employers to provide employees with vacations, paid or unpaid, most employers do offer their employees some form of vacation. New Jersey case law presumes that if an employer promises vacation, the employer is generally legally bound to provide it: that is, an employer's assurance of vacation time, whether made in an employee handbook or given orally, or simply consistently practiced, may constitute an enforceable implied contract.
Vacation pay due at termination? No New Jersey law provides that employers must pay for accrued unused vacation upon termination. Payment for unused vacation depends upon what the employer has promised. Although New Jersey's statutory definition of wages does not include vacation pay, the New Jersey Supreme Court has called vacation “compensation in lieu of wages, earned in part each week the employee works, and payable at a later time” (Owens v. Press Publishing Co., 20 N.J. 537, 547 (1956); Butler v. Bakelite Co., 32 N.J. 154 (1960)).
Therefore, if paid vacation is provided or promised, an employee who leaves the payroll should be paid for accrued but unused time--unless a written policy tells employees otherwise, or there are written, contingent circumstances to receiving vacation pay that the employee does not meet (NJ Rev. Stat. Sec. 2C:40A-2 and Sec. 34:11-4.1et seq.).
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 in drafting such policies. If the policy is intended to ensure that employees work the entire accrual ...