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mariemonroe

Participant quit before last day and claims his vacation time entitles him to contribution.

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A plan participant announced he was terminating employment as of 8/30/04. He did not give a written notice to this effect. The plan has a 8/31/04 plan year end and requires participants to be employed on the last day to receive an allocation of employer contributions. The participant is stating that he should get an allocation because he had unused vacation days. Any thoughts?

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Might depend on several factors, such as

- is a collective bargaining agreement applicable?

- past practice of the employer,

- written policies of the employer,

- was the employee's last day paid on 8/30 or 8/31?

- what does the plan say? This one tends to be very important. :)

Usually, it is the employer rather than the employee who defines the personnel policies, so it is probably the ER who gets to state the severance of employment date.

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Its not what the participant thinks but what the plan says. If the plan requires employment on the last day of the plan year and the participant is not employed on that date then there is no benefit accrual because the terms of the plan were not met. Unused vacation days dont count unless the participant takes vacation before termination.

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mbozek:

Do the hours paid for the accrued vacation count for counting hours during the plan year?

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I was asking a straight-forward question about counting hours, not last day of work. Perhaps I should've started a new topic.

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Some answers and a little background:

There is no Collective Bargaining Agreement.

The employer pays for work for the entire month on the 15th of the month so technically the participant was paid for 8/31 but I think the employer could ask that the participant return the payment for that day. (The participant wanted his last day to be 8/30 because he had a new job beginning on 8/31 but we are not poitive he actually began working for his new employer on that day)

The plan document requires 1000 hours of service and employment on last day of plan year to receive an allocation (except for death, disability and normal retirement age which don't apply here) and hours of service are defined to include hours of days when an active employee is on vacation.

We are working with the employer to figure out what there policies are - I suspect they either don't have one or have a very lax policy.

My feeling is that if you quit, you quit and don't get to take vacation. However, because we don't have anything written from the employee as to his termination date, I was hoping there was some rule out there which we could hang our hat on.

Does this spark any ideas? By the way, thanks for all of your responses.

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I think that the whole thing depends on whether these are paid vacation days or not unless there is some accepted policy that provides that vacation, paid or not are still days of employment. If it is paid vacation or still days of employmant he should be entitled to whatever it is that he would have been entitled to if he had been on the premises. He is still on the "job" and still "employed".

By the way, are you sure that payment of the 15th is for that month, in other words the employees are partially paid in advance?? How do you calculate OT? When do you pay OT? what do you usually do to employees who leave after the 15th and before the end of the month?

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Lets do simple, not complex! First the idiot has to be an employee to be employed on the last day.

To be an employee, there must be an employee-employer relationship. If the employee called in sick on 8/31 there would be such a relationship. If the employee called in dead, there could not be such a relationship. That is why some plans give the allocation with specific wording.

It appears the employee called in dead (not working there anymore). No matter what overtime, accrued leave time, whatever else, they are not an employee and therefore are not 'employed' as of year end.

My opinion of course.

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If the idiot employee was monthly paid salaried exempt and did not show up for work on the last day of the month because of death, Are you saying that on that last day (on which the employee was absent) no employee-employer relationship exists? Better check your payroll dept for what the law says about docking a salaried exempt employee who does not show.

So if this employer provided Group Term Life coverage to all employees, the insurance company would not have to pay the death benefit claim because the now dead person was no longer employed?

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In the absence of a written contract the employment relationship is considered to be at will, which means that it can be terminated by the employer or employee at any time. The employment realtionship ends on the date the employee is fired, quits or dies. Quitting inclules an employee stating that he is quitting or that this is his last day. The determination of when the employee quits for the purpose of the retirement plan is made by the plan admin in interpretating the terms of the plan without regard to whether the realtionship ends under any other plan or program. DC plans that require last day of participation for benefit accrual frequently permit accrual for participants whose employment teminates during the year on account of death, disability or retirement as an exception to the last day of employment requirement.

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So the question remains.. When was his last day?

pax asked :

- was the employee's last day paid on 8/30 or 8/31?

- what does the plan say? This one tends to be very important.

If he was paid for 8/31 then he was employed on 8/31. If he has been paid for untaken vacation, or has untaken accrued vacation days, then there is still, as pax also asked:

- past practice of the employer,

- written policies of the employer

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