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Leave Payment

When an employee separates from the university, you'll want to make sure that they get paid for their unused leave accruals, FLSA overtime and holiday time. Check for unused balances regardless of employee type, as a student or faculty member could have unused balances from a previous position. Refer to the following resources for help in the process of paying out leave.

Eligibility for Leave Payment

The employee may be eligible for payment for accrued leave balances when they separate from the university or transfer to another Texas state agency The following types of leave may be payable.

Vacation (Annual Leave) Payment

If an employee transfers to another State of Texas agency with no break in service, and the employee will be in a vacation eligible position at the new agency, the vacation (annual leave) balance will be transferred to the other agency.

If the employee meets these requirements, regardless of the type of employment or length of time employed at the university, the accrued vacation should be paid:

If the employee is in a vacation earning position at the time of separation, payments at separation must include payment for holidays that fall after the employee's separation date, provided the vacation balance is sufficient to carry them through the holiday. When the employee transfers to a position that is not eligible for vacation at state agency the vacation balance is paid, but not the holidays that fall after the separation date.

Floating Holiday Payment

Upon separation from university employment or transfer to another state agency, an employee shall be paid for any unused floating holiday balance. If the employee is also eligible to be paid for unused vacation hours, this payment should be made on the same voucher. Floating holiday hours should be listed as a separate item on the voucher, and not combined with the vacation balance.

FLSA Overtime Payment

An employee must be compensated for any unused, banked overtime if one of the following situations occurs:

Overtime is paid using an OV5 electronic payroll voucher. Once the voucher has been processed, the department time keeper must manually remove the hours paid from the employee’s overtime balance. Information about payroll vouchers is available on the Payroll Services website.

Sick Leave Payment

If an employee dies, their estate is entitled to receive payment for half of the final sick leave balance or 336 hours, whichever is less. The payment should be made using an electronic voucher (OV6), and a single voucher should be used to pay any vacation, floating holiday, or sick leave owed. If the employee was in a vacation earning position, the leave payment must include payment for holidays that fall after the employee's separation date, provided the vacation and sick leave balance is sufficient to carry them through the holiday. Sick leave should be listed as a separate item on the voucher, and not combined with the vacation or floating holiday balances.


How to Pay Employees for Unused Leave

In order to pay employees for vacation, floating holiday, or sick leave, your department must create an electronic voucher. You should create the voucher as soon as possible after an employee's separation in order to ensure timely payment. If an employee separates from the university or dies, take the following steps to pay them for unused vacation, floating holiday, and sick leave.

Steps for Creating the Voucher


When to Complete Vacation Vouchers

Your department should complete a vacation voucher immediately upon termination, separation or death. Vacation balance cannot be paid to an employee or retiree who continues to be in a paid position, even if the new position is non-vacation accruing. Once an employee has a break in service / separates from state employment, the vacation balance should be paid out at the rate at which they last earned vacation.  If an employee will be continuing State of Texas employment with no break in service, then you shouldn't process a vacation voucher—the employee should transfer the vacation balance to the new State of Texas agency.

After HR receives vacation vouchers, the payment is processed in the next semimonthly payroll. HR needs to receive vouchers prior to the appropriate payroll deadline in order for vouchers to be processed and paid out on time. You can find payroll-processing deadlines and check-release dates on the Payroll Services website.

Verifying Employees' Separation Dates

The ending date of the assignment is the official separation date. If the employee's assignment has not ended yet, contact the appropriate person in your department to make sure this is done. The separation date given on a voucher should match the ending date of the employee's assignment. If these dates do not match, it may cause delays in processing the voucher.

Leave Payment Checks

Leave payment checks will be distributed to employees the same way their previous payroll checks have been distributed unless employees make other arrangements with Payroll Services at the time of separation. Direct any questions regarding check distribution to Payroll Services at 512-471-5271.

Vacation Voucher Information

You can learn more about processing OV6 documents by visiting Payroll Services, Payroll Vouchers page or viewing the Payroll Vouchers PowerPoint presentation.