HD63 - Annual Leave and Sick Leave

  • Published: 1993
  • Author: Department of Personnel and Training
  • Enabling Authority: House Joint Resolution 207 (Regular Session, 1992)

Executive Summary:
House Joint Resolution 207 requested the Department of Personnel and Training (OPT) to study three issues: (1) the uniformity of state agencies' policies on carrying over annual leave credits from one calendar year to the next; (2) the impact that changing the annual leave policy would have on the payments made to employees for their accumulated hours of annual leave when they discontinue state employment; and (3) the feasibility of changing the current maximum payment of $2,500 for unused sick leave credits upon termination from state service.

I. Current Policies on the Carryover and Payment of Annual Leave

Rule 10.6(a) of the Rules for the Administration of the Virginia Personnel Act limits the number of earned but unused annual leave hours that full-time classified employees may carry forward from one calendar year to the next calendar year, and limits the hours for which they may be reimbursed when terminating from state service. Hours in excess of these maximums are forfeited at the end of the calendar year and forfeited when employees terminate from state service. Exceptions to Rule 10.6(a) (as it relates to balances carried forward from year to year) are allowed where agencies cannot permit employees to use their annual leave for substantial periods of time due to agencies' workload demands. No exceptions are permitted regarding the maximum amounts paid for annual leave balances when employees terminate from state service.

Il. Uniformity of Agencies' Exceptions to Annual Leave Carryover Policy

A survey of agencies' practices indicates that there is inconsistency in applying the criteria for exceptions to the limit on hours that may be carried over annually. Some agencies do not grant exceptions to the carryover policy at all. Among agencies granting exceptions, the period of time in which employees may use carried over leave varies from agency to agency.

III. The Impact of Changing the Carryover and/or Payment Provisions of the Annual Leave Policy

Elimination of the cap on annual leave hours that may be carried over and/or the limit on annual leave payable upon termination could result in a fiscal impact on the Commonwealth, and could have a detrimental impact on workplace management and productivity. Under current policies, it is estimated that at the end of each calendar year, and when terminating, employees forfeit leave worth a combined total of $4.6 million. Thus, if the current caps on annual leave were eliminated, the fiscal impact on the Commonwealth could amount to $4.6 million per year.

Additionally, survey data collected from local governments, private employers, and governments of other states revealed that only 13% of the employers allow an unlimited carryover of annual leave hours from year to year. Among the minority of employers permitting unlimited carryover, a majority of them reported that caps are placed on the amount of reimbursement received at termination.

With respect to the impact on workplace management and productivity, elimination of the annual leave carryover limit could eliminate the mechanism that encourages employees to take annual vacations. This elimination could result in an increase in employee "burn out," and decreased productivity. In addition, it is often more difficult for agencies to accommodate employees' requests to take annual leave for exceptionally long periods of time. Such requests likely would increase were there no cap on the carryover of annual leave.

IV. Feasibility of Changing The Amount Paid for Sick Leave When Employees Terminate

The payment of sick leave balances is governed by Rule 10.13 of the Rules for the Administration of the Virginia Personnel Act. This Rule directs that employees with five or more years of continuous state service be paid 25% of their sick leave balances, up to a maximum of $2500 upon their termination. If Rule 10.13 were changed to require payment of all sick leave hours accrued to all terminating employees, the additional cost to the Commonwealth is estimated to be approximately $35 million annually. Also, survey data from local governments, private employers, and governments of other states revealed that only 20% of the responding employers reimburse employees any portion of their sick leave balances when those employees terminate employment.

V. Conclusion

To eliminate inconsistencies among agencies in granting exceptions to the carryover of annual leave, it is recommended that DPT direct all agencies to review all requests for excess annual leave hours to be carried over, pursuant to the criteria previously established by DPT. The agencies will also be required to document the reasons for granting or denying any such requests. This documentation will then be audited, as necessary. Furthermore, DPT will reiterate the criteria for approving excess annual leave carryover, and require all agencies to comply accordingly.

Because of the fiscal impact and the potential detrimental affect on workplace productivity, it is recommended that the rules governing the amount of annual leave that may be carried over be retained. Due to the potential fiscal impact, it is also recommended that the current rules governing the amount of payment for sick leave balances not be altered substantially.