Job Change: Take Vacation or Cash Out Vacation?

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Vacation on the BeachWhenever you change jobs, there’s always some vacation days left over that you can either take or cash out (some employers won’t give you an option, this is for those who do have a choice). For me, the choice has often been pretty clear: take the days off. You’ll be paid for both but by taking vacation you get a few more benefits.

The only argument I can think of in favor of cashing out vacation is one where you want to start work at your new job ASAP and you’ve signed some sort of non-compete agreement with your former company. In that scenario, you would be in violation of that agreement if you worked for your new employer while still on the payroll of the former one. Outside of that scenario, unless you all can think of one, that’s the only argument for cashing out vacation. (There is one more, if you have a lot of vacation and you want to be paid in the current pay cycle rather in the next one… but that’s even rarer than the first scenario)

Here are reasons to take the vacation:

Medical Insurance

If you take the vacation days, you still get medical coverage for the time you’re on vacation. If you get paid out for those days, your medical insurance ends on your final day. This may not be a big deal if you start your new job immediately. If you want a few days off in between employers, it pays to “take vacation” and have medical coverage.

One thing I never understood was why my medical insurance expired on the last day of employment yet I continued to pay, out of payroll deductions, for medical for the entire month.

Accrued Benefits

Depending on how your benefits math is calculated, you may want to schedule your final day during the beginning of a month. At my last employer, our vacation days were accrued on a monthly basis. When I left on February 28th, I didn’t get the vacation days I had accrued for the month of February (ouch). This may be the case for the accrual of other benefits as well, such as pensions, so you might want to take a few vacation days to pull you into the next month.


If you’re a few days away from a holiday, it’s better to take the vacation and get paid for those holidays (duh). I knew someone who switched jobs around Thanksgiving. Using his vacation from his first employer, he was able to stretch is last day past Thanksgiving. He also started at his new job on the Monday before Thanksgiving. End result was that he was paid by two employers for that nice two day holiday… very clever!

One thing to be aware of is whether you signed any sort of non-compete agreement (as mentioned earlier) while you were employed with your former company. In the case of my Thanksgiving friend, there was no non-compete agreement in place (not that the first employer knew) and so he could technically be employed at the two companies simultaneously so all was okay.

There you have it, some reasons why you should take your vacation rather than taking a straight payout. Of course, this requires some delicate discussion with your HR department or your direct manager. I’ve found that people are reasonable, will appreciate some forewarning, and won’t mind you taking vacation. If your HR or your manager doesn’t seem reasonable (and everyone who has an unreasonable HR and/or manager knows they’re unreasonable), give the least amount of notice possible. It’s all business.

(Photo by Storm Crypt)

{ 7 comments, please add your thoughts now! }

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7 Responses to “Job Change: Take Vacation or Cash Out Vacation?”

  1. Greg says:

    Check company policies before counting on the vacation.
    -some PTO is chased out, some is “Use it or loose it”
    -some companies will not grant PTO once you have submitted your notice

    I have worked for companies where both of these were issues.

    Also, if you want time off between jobs, set your start day for your new job a couple weeks after the end date of your old job.

    Also, some jobs will let you go immediately and pay out the two weeks notice.

  2. Charlie says:

    Take at least a week off between jobs… take care of some unfinished business, get your affairs in order, and take a load off. Get your mind right to start the new job.

  3. Anonymous says:

    if you hop from job to job, you’ll never get ahead. work hard, quit gaming the system

    • Seeker says:

      Most people asking this question aren’t interested in jumping from one job to another or trying to “game the system”. We simply are leaving one employer and want to know what the best scenario is regarding vaction time.

  4. Lazy Man says:

    I personally like the time of double paychecks. I usually have more than one week saved. I like to use one week off to collect my thoughts, and anything more than that is used as extra income.

  5. saladdin says:

    “if you hop from job to job, you’ll never get ahead. work hard, quit gaming the system”

    So let your employer take care of you? It’s your bosses responsibility?

    No one has your best interests in mind except you. So I should intentionally stay at a crappy job while making less then I can get in other places?

    I’m actually glad some people believe this. It means less competition for that better job I am applying for.


  6. jim says:

    I’m with you saladdin, you have to take care of yourself. While I respect those that feel that putting your time and earning your “stripes” is the way to go, I don’t agree with it. There’s no sense staying at a crappy job.

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