Do employees get paid for unused annual leave when they separate?

Yes—lump-sum payout for unused annual leave at separation, unless terminated for gross misconduct (no payout).

Notes:

• If you separate within your first year and before your service anniversary, your final paycheck may be reduced if you used more annual days than months worked (major portion). Service credit is adjusted as well.
• If rehired by the State within 1 year, any accrued, unused annual leave that wasn’t paid out is reinstated.
• For gross misconduct (or resignation in lieu), the agency must submit a detailed report (with statutory citation) to DOHR; no payout.
• See Chapter 16 for payout methods.

Example: Hired July 1, 2024; frontloaded 12 days annual + 12 days sick. Used 5 annual days in August. Resigned Sept 1, 2024 (worked major portion of 2 months). Final paycheck reduced by 3 annual days (used 5; earned 2).

For more information, visit the State of Tennessee Attendance and Leave Manual.