SCA Vacation: Service, Vesting and the Deadline to Give It

David Gul · Last updated November 3, 2026

ExcelGurus is not affiliated with, endorsed by, or acting for the U.S. Department of Labor, the U.S. General Services Administration or any other federal agency. This guide describes the regulations, clauses and decisions it cites as read on November 3, 2026; they change, so check them, the clauses in your own contract and its current wage determination before you rely on it. It is not legal advice.

Under a Service Contract Act (SCA) wage determination, vacation does not build up pay period by pay period: the full benefit vests on each anniversary of employment, on many wage determinations 2 weeks after 1 year of service, 3 after 5 years and 4 after 15. Service counts with your company and with earlier contractors who did similar work at the same federal facility, so a successor can owe the incumbent’s employees their longer tiers. The vested vacation must be given or paid before the next anniversary, before the contract ends, or before the employee leaves, whichever comes first. EG SCA Wage Pack (52.222-43) keeps each employee’s hire date and any service with the predecessor contractor, and shows vested vacation not given or paid.

Where the tiers come from

The vacation you owe is set by the VACATION line of the wage determination in your contract, not by your own policy. Wage determination 2015-5619 (Revision 30, August 27, 2026) reads: “2 weeks paid vacation after 1 year of service with a contractor or successor, 3 weeks after 5 years, and 4 weeks after 15 years.” That is the most common schedule, but not the only one: among the standard wage determinations we have read, many give the third week after 8 years instead of 5, some reach 4 weeks only after 20 years, and there are about 25 different schedules in all. Read the line on yours; our guide to reading a wage determination shows where it sits.

A week of vacation is 40 hours unless the wage determination says otherwise (29 CFR 4.173(c)(1)). Some wage determinations state vacation as a cash amount per hour, and those built on a collective bargaining agreement can carry their own rules; the rules below are the defaults that apply when the wage determination does not say otherwise.

Service that counts

Unless the wage determination says otherwise, two kinds of service count toward a tier (4.173(a)(1)):

• Your own company, in any capacity. The whole span of continuous service with you, commercial work included, not only time on the government contract. An employee with 18 months on your commercial work and 6 months on the contract has more than a year.
• Earlier contractors on the same work. Continuous service with any predecessor contractor that “carried out similar contract functions at the same Federal facility”. The regulation’s example: 16 months with two predecessors on a janitorial contract at one base, then 8 months with you, meets the one-year test.

It does not matter that a different agency bought the services before, or that the agency split or combined contracts (4.173(a)(3)), or that an earlier contract had no fringe benefit determination at all (4.173(a)(5)). Prior service as a federal employee does not count (4.173(a)(3)).

The service must be continuous, and the reason for an absence decides whether it broke (4.173(b)):

An employee may not be let go and rehired to get around the vacation requirement (4.173(b)(2)).

Vesting: nothing before the anniversary

SCA vacation is not accrued by the hour or the pay period. The regulation says “there is no accrual or vesting of vacation eligibility before the employee’s anniversary date of employment” (4.173(c)(1)). On each anniversary the full week or weeks of the tier vest at once. Two consequences surprise people:

• An employee who leaves before the first anniversary is owed no vacation at all.
• An employee who leaves 13 months in, without having had any vacation, is owed one full week, not one week plus a twelfth.

The anniversary is the date the employee started, counting predecessor service: on a contract you took over, it is usually not the date the employee joined your payroll. A wage determination may provide for accrual instead, and then it governs.

The deadline, and no carryover

You do not have to give the vacation on the anniversary itself. It can be scheduled under a reasonable plan agreed with and communicated to the employees, but “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” (4.173(c)(2)). Unused vacation “may not be carried over from year to year” (Field Operations Handbook 14j03(e)).

An example. A guard’s tenth anniversary, counting six years with the predecessor, is March 15, 2026. On the schedule above that vests 3 weeks, 120 hours. The deadline is March 14, 2027, unless the contract ends first: if it ends September 30, 2026, the 120 hours are due by then. If the wage determination rate is $18.00 and the guard’s own rate is $18.50, the payment owed is 120 times $18.50, $2,220.00.

Who pays when the contract changes hands

“The liability for an employee’s vacation is not prorated among contractors” unless the wage determination says so (4.173(d)(1)). Whoever employs the person on the anniversary owes the whole benefit. In the regulation’s example, an employee hired by the predecessor on July 1, 1978 had no anniversary during that contract, which ended June 30, 1979; on July 1, 1979 the full vacation vested, and the successor owed all of it.

To make this workable, the incumbent must give the contracting officer, not less than 10 days before its contract ends, a certified list of the names of all service employees on its payroll in the last month, with each one’s anniversary date on the contract, with it or earlier contractors; the contracting officer passes it to the successor when the new contract starts (FAR 52.222-41(n); 29 CFR 4.6(l)(2)). A list that never arrives does not excuse the successor: “a contractor is not relieved from any obligation to provide vacation benefits because of any difficulty in obtaining such data” (4.173(d)(2)). See our guide to successor contractors for the rest of what carries over.

How much, and at what rate

The rate is the wage determination rate or the employee’s regular rate, whichever is higher (Field Operations Handbook 14j03(g)), and it is the rate in effect in the workweek the vacation is taken or paid, not an average of two rates when a raise falls in the year (4.173(e)(1)). Paying vacation at the wage determination rate to an employee who normally earns more is a shortfall.

Paying cash instead of time off

The regulation allows payment in lieu of the time off (4.173(c)(2)). An hourly cash equivalent is figured from the employee’s rate: with a one-week tier and a $4.50 rate, $4.50 times 40, divided by 2,080, is $0.0865 an hour (4.177(c)(5)). Those payments need start only once the employee has met the service requirement, and if the employee leaves before receiving the full vested amount, “the employee must be paid the full amount of any difference remaining as the final cash payment” (4.177(c)(6)).

Vacation hours earn health and welfare

Health and welfare (H&W) is due on every hour paid, paid vacation included, up to 40 hours a week and 2,080 a year (4.173(e)(2); 4.175(a)(1)), so a week of vacation carries a week of H&W. The one exception is an employee who works all 52 weeks and is paid vacation in lieu of time off: that employee gets the vacation pay but is not entitled to an additional 80 hours of H&W on it (4.175(a)(1)(iv)). Our health and welfare guide has the rest of those rules.

At an option: tiers and the price adjustment

When a new wage determination at an option adds a tier or shortens the service it takes, the added vacation hours count at the new rate in the FAR 52.222-43 price adjustment, like any other increase the new wage determination makes you pay.

What happens when the wage determination does not change but more of your employees reach a longer tier is disputed. In United States v. Service Ventures (Fed. Cir. 1990), as the Federal Circuit described it in Lear Siegler Services v. Rumsfeld (2006), more employees became entitled to vacation in the first option year under the same vacation line, and the extra cost was held recoverable, because the benefits were due under the wage determination that applied at the option. The Air Force’s Price Adjustment Guide (September 2022), section 8.3, says no adjustment is permitted “merely because an individual employee’s seniority has increased” the entitlement, absent an actual increase in compensation due. A request that includes such a cost is clearer with it on a line of its own, naming the decision it rests on.

Sources

Primary sources, as read on November 3, 2026. They change; the current versions are the ones that count.

• 29 CFR Part 4 (www.ecfr.gov), sections 4.6(l)(2), 4.173, 4.175(a)(1), 4.176(a) and 4.177(c)
• FAR 52.222-41, Service Contract Labor Standards (www.acquisition.gov), paragraph (n), the seniority list
• Wage determination 2015-5619, Revision 30 (August 27, 2026) (sam.gov), the vacation line
• WHD Field Operations Handbook, Chapter 14 (PDF) (www.dol.gov), 14j03
• WHD Fact Sheet 67B, Meeting Requirements for SCA Fringe Benefits (October 2024) (www.dol.gov)
• Lear Siegler Services, Inc. v. Rumsfeld, No. 06-1080 (Fed. Cir. 2006) (PDF) (www.cafc.uscourts.gov), describing United States v. Service Ventures
• U.S. Air Force, FLSA, SCLS and EO 14026 Price Adjustment Guide, September 2022 (PDF) (www.af.mil), section 8.3

More Service Contract Act guides: FAR 52.222-43 Price Adjustments for Service Contract Act Contractors · SCA Health and Welfare: The 2026 Rate and the Hours That Earn It · The SCA Price Adjustment Letter: What a 52.222-43 Notice Says · How to Read an SCA Wage Determination · Common SCA Payroll Mistakes, and How to Catch Them · SCA Holiday Pay: Who Earns It, How Much, and a Holiday Worked · Successor Contractors and CBA Wage Rates Under the SCA · SCA Conformance: When an Occupation Is Not on the Wage Determination · Service Contract Act vs. Davis-Bacon: Which Applies, and What Changes · Executive Order Minimum Wage and Paid Sick Leave on SCA Contracts · All SCA guides