- An employee earns Vacation Pay as they work.
- Earned Vacation Pay is deposited into a Vacation Bank.
- Employee is paid from Vacation Bank when on vacation.
Vacation Pay is accrued (earned) over time as the employee works. It can be used when the employee wants to take a vacation.
Employees begin with a zero balance in their Vacation Bank as they have not worked yet, thus have not earned any Vacation Pay.
As the employee works they accrue vacation pay into their Vacation Bank. At the end of every pay period an amount is deposited into the employees Vacation Bank on their pay day.
When the employee is ready to take a vacation, they can check their Vacation Bank balance to see how much Vacation Pay they have earned.
The employer debits the employees Vacation Bank to pay the employee when they are on vacation.