(a) Determining length of service for vacation eligibility. It has
been found that for many types of service contracts performed at Federal
facilities a successor contractor will utilize the employees of the
previous contractor in the performance of the contract. The employees
typically work at the same location providing the same services to the
same clientele over a period of years, with periodic, often annual,
changes of employer. The incumbent contractor, when bidding on a
contract, must consider his liability for vacation benefits for those
workers in his employ. If prospective contractors who plan to employ the
same personnel were not required to furnish these employees with the
same prevailing vacation benefits, it would place the incumbent
contractor at a distinct competitive disadvantage as well as denying
such employees entitlement to prevailing vacation benefits.
(1) Accordingly, most vacation fringe benefit determinations issued
under the Act require an employer to furnish to employees working on the
contract a specified amount of paid vacation upon completion of a
specified length of service with a contractor or successor. This
requirement may be stated in the determination, for example, as ``one
week paid vacation after one year of service with a contractor or
successor'' or by a determination which calls for ``one week's paid
vacation after one year of service''. Unless specified otherwise in an
applicable fringe benefit determination, an employer must take the
following two factors into consideration in determining when an employee
has completed the required length of service to be eligible for vacation
benefits:
(i) The total length of time spent by an employee in any capacity in
the continuous service of the present (successor) contractor, including
both the time spent in performing on regular commercial work and the
time spent in performing on the Government contract itself, and
(ii) Where applicable, the total length of time spent in any
capacity as an employee in the continuous service of any predecessor
contractor(s) who carried out similar contract functions at the same
Federal facility.
(2) The application of these principles may be illustrated by the
example given above of a fringe benefit determination calling for ``one
week paid vacation after one year of service with a contractor or
successor''. In that example, if a contractor has an employee who has
worked for him for 18 months on regular commercial work and only for 6
months on a Government service contract, that employee would be eligible
for the one week vacation since his total service with the employer adds
up to more than 1 year. Similarly, if a contractor has an employee who
worked for 16 months under a janitorial service contract at a particular
Federal base for two different predecessor contractors, and only 8
months with the present employer, that employee would also be considered
as meeting the ``after one year of service'' test and would thus be
eligible for the specified vacation.
(3) The ``contractor or successor'' requirement set forth in
paragraph (a)(1) of this section is not affected by the fact that a
different contracting agency may have contracted for the services
previously or by the agency's dividing and/or combining the contract
services. However, prior service as a Federal employee is not counted
toward an employee's eligibility for vacation benefits under fringe
benefit determinations issued pursuant to the Act.
(4) Some fringe benefit determinations may require an employer to
furnish a specified amount of paid vacation upon completion of a
specified length of service with the employer, for example, ``one week
paid vacation after one year of service with an employer''. Under such
determinations, only the time spent in performing on commercial work and
on Government contract work in the employment of the present contractor
need be considered in computing the length of service for purposes of
determining vacation eligibility.
(5) Whether or not the predecessor contract(s) was covered by a
fringe benefit determination is immaterial in determining whether the
one year of
service test has been met. This qualification refers to work performed
before, as well as after, an applicable fringe benefit determination is
incorporated into a contract. Also, the fact that the labor standards in
predecessor service contract(s) were only those required under the Fair
Labor Standards Act has no effect on the applicable fringe benefit
determination contained in a current contract.
(b) Eligibility requirement--continuous service. Under the
principles set forth above, if an employee's total length of service
adds up to at least one year, the employee is eligible for vacation with
pay. However, such service must have been rendered continuously for a
period of not less than one year for vacation eligibility. The term
``continuous service'' does not require the combination of two entirely
separate periods of employment. Whether or not there is a break in the
continuity of service so as to make an employee ineligible for a
vacation benefit is dependent upon all the facts in the particular case.
No fixed time period has been established for determining whether an
employee has a break in service. Rather, as illustrated below, the
reason(s) for an employee's absence from work is the primary factor in
determining whether a break in service occurred.
(1) In cases where employees have been granted leave with or without
pay by their employer, or are otherwise absent with permission for such
reasons as sickness or injury, or otherwise perform no work on the
contract because of reasons beyond their control, there would not be a
break in service. Likewise, the absence from work for a few days, with
or without notice, does not constitute a break in service, without a
formal termination of employment. The following specific examples are
illustrative situations where it has been determined that a break in
service did not occur:
(i) An employee absent for five months due to illness but employed
continuously for three years.
(ii) A strike after which employees returned to work.
(iii) An interim period of three months between contracts caused by
delays in the procurement process during which time personnel hired
directly by the Government performed the necessary services. However,
the successor contractor in this case was not held liable for vacation
benefits for those employees who had anniversary dates of employment
during the interim period because no employment relationship existed
during such period.
(iv) A mess hall closed three months for renovation. Contractor
employees were considered to be on temporary layoff during the
renovation period and did not have a break in service.
(2) Where an employee quits, is fired for cause, or is otherwise
terminated (except for temporary layoffs), there would be a break in
service even if the employee were rehired at a later date. However, an
employee may not be discharged and rehired as a subterfuge to evade the
vacation requirement.
(c) Vesting and payment of vacation benefits. (1) In the example
given in paragraph (a)(1) of this section of a fringe benefit
determination calling for ``one week paid vacation after 1 year of
service with a contractor or successor'', an employee who renders the
``one year of service'' continuously becomes eligible for the ``one week
paid vacation'' (i.e., 40 hours of paid vacation, unless otherwise
specified in an applicable wage determination) upon his anniversary date
of employment and upon each succeeding anniversary date thereafter.
However, there is no accrual or vesting of vacation eligibility before
the employee's anniversary date of employment, and no segment of time
smaller than one year need be considered in computing the employer's
vacation liability, unless specifically provided for in a particular
fringe benefit determination. For example, an employee who has worked 13
months for an employer subject to such stipulations and is separated
without receiving any vacation benefit is entitled only to one full
week's (40 hours) paid vacation. He would not be entitled to the
additional fraction of one-twelfth of one week's paid vacation for the
month he worked in the second year unless otherwise stated in the
applicable wage determination. An employee who has not met the ``one
year of service'' requirement would not be
entitled to any portion of the ``one week paid vacation''.
(2) Eligibility for vacation benefits specified in a particular wage
determination is based on completion of the stated period of past
service. The individual employee's anniversary date (and each annual
anniversary date of employment thereafter) is the reference point for
vesting of vacation eligibility, but does not necessarily mean that the
employee must be given the vacation or paid for it on the date on which
it is vested. The vacation may be scheduled according to a reasonable
plan mutually agreed to and communicated to the employees. A
``reasonable'' plan may be interpreted to be a plan which allows the
employer to maintain uninterrupted contract services but allows the
employee some choice, by seniority or similar factor, in the scheduling
of vacations. However, the required vacation must be given or payment
made in lieu thereof before the next anniversary date, before completion
of the current contract, or before the employee terminates employment,
whichever occurs first.
(d) Contractor liability for vacation benefits. (1) The liability
for an employee's vacation is not prorated among contractors unless
specifically provided for under a particular fringe benefit
determination. The contractor by whom a person is employed at the time
the vacation right vests, i.e., on the employee's anniversary date of
employment, must provide the full benefit required by the determination
which is applicable on that date. For example, an employee, who had not
previously performed similar contract work at the same facility, was
first hired by a predecessor contractor on July 1, 1978. July 1 is the
employee's anniversary date. The predecessor's contract ended June 30,
1979, but the employee continued working on the contract for the
successor. Since the employee did not have an anniversary date of
employment during the predecessor's contract, the predecessor would not
have any vacation liability with respect to this employee. However, on
July 1, 1979 the employee's entitlement to the full vacation benefit
vested and the successor contractor would be liable for the full amount
of the employee's vacation benefit.
(2) The requirements for furnishing data relative to employee hiring
dates in situations where such employees worked for ``predecessor''
contractors are set forth in Sec. 4.6. However, a contractor is not
relieved from any obligation to provide vacation benefits because of any
difficulty in obtaining such data.
(e) Rate applicable to computation of vacation benefits. (1) If an
applicable wage determination requires that the hourly wage rate be
increased during the period of the contract, the rate applicable to the
computation of any required vacation benefits is the hourly rate in
effect in the workweek in which the actual paid vacation is provided or
the equivalent is paid, as the case may be, and would not be the average
of the two hourly rates. This rule would not apply to situations where a
wage determination specified the method of computation and the rate to
be used.
(2) As set forth in Sec. 4.172, unless specified otherwise in an
applicable fringe benefit determination, service employees must be
furnished the required amount of fringe benefits for all hours paid for
up to a maximum of 40 hours per week and 2,080 hours per year. Thus, an
employee on paid vacation leave would accrue and must be compensated for
any other applicable fringe benefits specified in the fringe benefit
determination, and if any of the other benefits are furnished in the
form of cash equivalents, such equivalents must be included with the
applicable hourly wage rate in computing vacation benefits or a cash
equivalent therefor. The rules and regulations for computing cash
equivalents are set forth in Sec. 4.177.
