Are Vacation Benefits Deductible From Awards of Damages?
In principle, vacation benefits are different than sick leave benefits. While sick days are akin to an insurance plan (i.e. there when needed), vacation benefits are part of the employee’s basic remuneration package and are expected to be used yearly to maintain productivity, not to treat illnesses. Thus, they are more akin to a pension plan with an effect on the real wage of workers. Under certain employment contracts, the unused balance may be carried over and cashed-in at a later date. However, to the extent that vacations are used by an injured employee to recover, the benefits could arguably be deductible as if the worker had received his or her full salary. But, like sick leave benefits, the depletion of the bank could arguably be claimed as a loss if redeemable at a later date and it is shown that the accident had an impact on the value of the asset when cashed-in.
