Complete Labor Law Poster for $24.95
from, includes
State, Federal, & OSHA posting requirements


No announcement yet.

Banked Time Payout at " Retirement"

  • Filter
  • Time
  • Show
Clear All
new posts

  • Banked Time Payout at " Retirement"

    Not a legal question but a behavior question or prediction:

    For decades school has encouraged staff to bank leave for a rainy day ..with no caps ..saves them money as to substitutes and to some extent on disability pay if. One does have a long term issue. Some but certainly not all staff do bank leave. In some cases as much as two years of leave., one gets 14 days a year one can bank. Some pretty hefty banked leave sort of escheats to administration.

    Until recently banked leave at retirement was paid out at 25% and lump sum not as salary thus avoiding pension plan costs or state and local income taxes

    New administration sees this as an unfunded liability. Cuts it to 12.5 % payout for future hires .

    I see it as a bit of an interest free loan to administration with prospect of mere 25 % payback at end . IE administration wins more if people retire with more banked leave.

    I was an engineer...never trained in behavior .....but my prediction is cost increase due to greater use of use it or lose it stance being a use it posture.

    Top dog bean counter says it will save money.

    Who is likely to be proven right long term?

  • #2
    Speaking from experience, the only change in leave usage I saw was among those close to retirement (we only paid out if you retired, not if you quit/were fired). Those close to retirement would use more days for non-essential purposes or for things they had in the past scheduled around work. It wasn't enough to offset the savings on paid out leave.

    Most systems also count unused leave days toward extra service time at retirement as well which provides an incentive to not use leave unless needed.
    I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


    • #3
      This particular system is designed NOT to count banked leave into service time at the end --there is no practical incentive to bank it for that purpose --a tiny few contracts are designed to pack leave into service time --but that is suspect if uncovered.

      I sort of agree and anticipate that those close to retirement may be tempted to use it up --especially if the payout ratio drops to 12.5% from 25%

      Defacto and mathamatically if one burns up such banked leave so as to stretch out the retirement date one does add to counted service time

      One can put in for retirement well in advance easily a year ahead of time --so my prediction is costs are likely to rise as some with large amounts of banked time are essentially free to burn it off .
      ( The "rulebook" actually say one is free to use up personal days w/o management prior approval once ones retirement papers are submitted!)

      The bean counter COO says we will save money --

      I'm betting he is penny wise pound foolish. Good bet?



      • #4
        Anytime you take away or reduce a benefit, even one that the law doesn't require you offer in the first place, employees are going to grumble. A this will only affect new employees, there will be much less grumbling I suspect. New EEs will know the deal going in and honestly, 95% of what you tell a new employee about what happens at retirement 20+ years in the future, they forget or disregard. I doubt the fact that only 12.5% of unused leave as opposed to only 25% is going to make a huge difference over the course of a career.

        I am surprised that there would be an actual rule that once retirement papers go in, leave may be used at will and without prior approval. That is unusual in the extreme.
        I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.


        • #5
          I too was surprised to find such a written provision about consumption of leave.....almost as good as a sabbatical of no return....that door is being closed down quite a bit.


          The forum is intended for informational use only and should not be relied upon and is not a substitute for legal advice. The information contained on are opinions and suggestions of members and is not a representation of the opinions of does not warrant or vouch for the accuracy, completeness or usefulness of any postings or the qualifications of any person responding. Please consult a legal expert or seek the services of an attorney in your area for more accuracy on your specific situation.