Question

Entity A's employees are entitled to six days paid sick leaves per year. Any unused sick leave is converted to cash when the employee resigns or retires. The sick leave benefits are considered

a. vesting
b. non-vesting
c. non-accumulating
d. monetizing

Answer 1

Unused sick leave converted to cash at resignation or retirement for Entity A's employees is classified as a vesting benefit. This reflects a guaranteed entitlement under specified conditions as opposed to non-vesting or accumulating benefits. The monetizing of benefits is a result of the vesting nature of the policy.

Step-by-step explanation:

The employee benefit in question, where a company converts unused sick leave to cash upon resignation or retirement, is recognized as a vesting benefit.

This type of benefit is one where the entitlement is guaranteed to the employee after a certain period or under particular conditions, which, in this case, would be their resignation or retirement. As opposed to non-vesting benefits, vesting benefits are legally bound to be provided once the criteria are met.

Additionally, since employees are entitled to only six days of sick leave per year and there is no indication that these days can be accumulated over years, the benefit does not appear to be accumulating. Instead, the monetizing of these benefits occurs at the end of employment, making the 'monetizing' aspect a result of the 'vesting' policy.