What Is The Difference Between Sick Leave And Vacation Leave? Why Not Have A Combined Personal Leave Benefit?
by James on Jul.19, 2009, under Vacations
I am working for a small company that wants to begin to offer vacation and sick leave benefits. They plan to offer both as a “personal leave” policy that can be used either for sick leave or vacation. I do not understand how the IRS might treat them differently. It seems most companies do not have a combined personal leave benefit.
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5 Comments for this entry
July 19th, 2009 on 3:58 am
most companies let you use both as “personal use”. However, sick leave is technically for “sick” days and vacation leave for “vacation” days.
July 19th, 2009 on 6:38 am
I don’t believe the IRS treats them any differently. Income is income, and adds up the same way if it’s earned, or sick time, or vacation time.
The difference is in when & how you can use it. And that varies from company to company.
Often sick time, if you don’t use it, “expires”, where vacation time adds up, and if you don’t take vacation, your total available vacation time accrues. Not always though – some companies let unused vacation time expire, too. In which case, there’s almost no difference between vacation and sick time other than the name.
July 19th, 2009 on 11:27 am
We offer sick and vacation leave rather than PPO time. Our reasoning is that we pay out vacation time accrued at termination, but not sick leave. If we lumped it all together into PPO time, we might be paying out more money at termination.
Other than that, it’s basically the same.
July 19th, 2009 on 3:53 pm
This is becoming more common. And there’s no tax difference – if leave is paid, it’s taxable income just like the pay for days you are at work, whether it’s vacation, sick days, or some other type of personal days.
July 19th, 2009 on 10:17 pm
My husband works for Trader Joe’s and that’s what they do with his. It’s called AR time and it just accumulates until he needs it, sick or vacation or whatever. We love it, I wish my company would do that!