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Case Study: Labor relations vacation entitlement

4. Vacation


When Stan Cooper quit his job at the end of January of a recent year, the personnel manager saw to it that his final check included all pay and allowances due as of his last day of work. Management assumed that was the last they would see of this former employee, but seven months later-shortly before August 1 of that year-Stan showed up to collect his one week of vacation pay. The personnel manager said he was not due the vacation pay. Stan may have expected that response for he had a copy of the union contract with him, with sentences in the vacation pay clause underlined. "It says here that to be eligible for a week of vacation a man must have worked 100 days prior to August 1st of the vacation year," he pointed out. "I finished my last vacation on August 10, and worked more than 100 days before I quit, so I'm entitled to the money."

"But that clause, and the reference to August 1st, presupposes that an employee would still be on the payroll when the new vacation season rolls around," the personnel manager explained.
"Maybe that's what you presupposed, not what the union presupposed. I checked with the union and they agree with me that I've got the money coming to me."

As Stan was no longer an employee, he could not file a grievance directly. The union, however, filed one in his behalf, and a few months later, the union summoned an arbitrator to rule on how the following contract language applied to Stan's case:


Employees to be eligible for one week's vacation with pay shall have worked 100 working days prior to August 1st of the vacation year. An employee's vacation pay is to be based upon the straight time average earned for the months of January, February, and March or February, March, and April of the vacation year. The period selected to be on a departmental basis. Employees on leave of absence due to injury, sickness, or other need of medical care shall be considered as working during such leaves of absence for purposes of computing vacations.

The company's chief arguments were:
1. The reference to August 1 means that only those on the rolls as employees on that date are entitled to vacation pay, provided they also meet the 100-day requirement.

2. According to union interpretation, a man who quits after working 100 days after his last vacation can still get vacation money the following year. This was not the intention of the negotiators.

3. The fact that the rate of vacation pay is based upon earnings during the first three or four months of the year reinforces management's judgment that a man can't quit in January and still collect for a vacation.

The union's answer was:
1. According to management interpretation, a man who quits or dies at the end of July would not be entitled to any vacation money, no matter how many days he worked since the last vacation. It is not believable that the negotiators could have intended such a result.
2. The August 1 date is merely the cutoff point for meeting the 100-day requirement. It doesn't mean that a man who already qualified for vacation money has to be employed on that date.
3. The reference to January through April is just a convenient way of computing the amount of vacation pay. It has nothing to do with eligibility. We will have no trouble determining the amount of money Stan is supposed to receive.


Stan was awarded vacation money. The arbitrator agreed with the union that the August 1st cutoff date was only for determining length of service and number of days worked. He pointed out: "there is no clause stipulating that vacations shall be limited to workers on the payroll, or on the seniority list, or otherwise in the company." The arbitrator also stated that this conclusion is consistent with general industrial relations practice. Although not bound by precedents, he wrote, "I must conclude that the particular contract before me was intended to have the meaning given to similar vacation clauses by settled industrial practice." The arbitrator did find some slight support for management's position in the January through April reference, and he conceded that this language showed a presumption that employees would remain on the payroll at least through April. The presumption, however, wasn't ironclad, and it was not sufficient to overcome the effect of the particular language the negotiators had used.

Questions for Discussion:

a. In view of the decision in this case, if the same situation arose again during the same contract, do you think an employee quitting at the end of January, after completing 100 days of work since his previous vacation, could claim vacation pay immediately, or would he have to wait for the next August 1 before getting it?

b. The vacation clause states that employees on leave of absence due to injury are deemed to be working, for purposes of meeting the 100-day requirement. Let us assume that an employee ended his 1968 vacation on July 15 and worked 100 days before the end of the year. He then suffered an injury that kept him from work during the first four months of 1969. On quitting his job on May 1, he would have more than 100 working days to his credit, but he would not have had any earnings during the first three months of 1969 on which to base his vacation pay. How would you propose that the problem be solved?

c. In view of the decision in this case, do you think Stan would have won the week of vacation pay if, instead of quitting, he had been discharged for just cause?

d. This arbitration case revealed many ambiguities in the vacation clause. We do not know whether, during the next contract negotiations, the parties made an effort to write a more satisfactory clause. If you were a negotiator for the company, what language would you propose to give employees vacation money provided they worked at least 100 days since the last vacation and provided they were still in the company's employ by, let us say, May 1?


Solution Preview

You have asked for a response to the attached questions based on the scenario also attached. I have provided responses to the questions below, as I would have dealt with them should I have ever found myself in such a position (either as the employee or as the management of the company). Please note that any action that may or may not have been taken in the real life situation presented depends heavily upon the company in question and what kind of relationship they have with a particular employee or a particular union. When wording is ambiguous in contracts such as this, the type of relationship of the parties involved goes a long way in determining whether or not an amicable solution is decided upon or if arbitration is needed.

Questions for Discussion:

a. In view of the decision in this case, if the same situation arose again during the same contract, do you think an employee quitting at the end of January, after completing 100 days of work since his previous vacation, could claim vacation pay immediately, or would he have to wait for the next August 1 before getting it?

Certainly if a second situation went to arbitration the vacation pay would be awarded immediately. However, the company ...