REMUNERATION, Allocation of vacation pay, Bonus, Contractual specification, Designation of vacation, Payment in lieu of vacation
CITE AS: Renown Stove Company v U. C. C., 328 Mich 436 (1950).
Appeal pending: No
Claimant: George Sheldon, et al
Employer: Renown Stove Company
Docket No: B8 5900 1 9580
MICHIGAN SUPREME COURT HOLDING: Where the option to receive vacation with pay or payment in lieu of vacation rests with the employee, a payment received during a period of unemployment will be deemed a bonus rather than vacation pay.
FACTS: One group of employees worked under a contract which provided for vacation pay and specified the vacation period from July 5 to July 18, 1948. There was no option for payment in lieu of vacation. The second group's contract also provided for vacation pay but their vacation period was not specified and these claimants had the right to receive pay in lieu of vacation. Both groups of employees were laid off for lack of work in April, 1948 and filed for and began receiving unemployment benefits. On June 28, 1948, they received checks equal to either 1 or 2 weeks of wages. The employer contested the payment of benefits for the period following July 5, 1948 asserting that the workers had vacation pay for the same period.
DECISION: The claimants covered by the first agreement received vacation pay and are not entitled to receive unemployment benefits for the same period. Those covered by the second agreement received a bonus and not vacation pay and are entitled to receive benefits with respect to the period beginning July 5 during which they did not work.
RATIONALE: The controlling question is whether the employer paid the employees for or with respect to the 1 or 2 week period beginning July 5. The first agreement specified that the period from July 5 to July 18 was a vacation period and those claimants were not entitled to the June 28 payment for any other reason. But, the claimants who worked under the second agreement had the option to take a vacation with pay or work, and in addition to wages for such work, receive a bonus in lieu of the vacation with pay. Since the option rested with the employees, the June 28 payment was a bonus and not vacation pay.