We use an adjusted date of hire policy for sick and vacation purposes and have a put a cap on some one who has gone for more than 3 years as not eligible for this benefit. But our policy does not say anything relating to Service credit. Is it normal for companies/organization to put up a policy on how to calculate service credit and also maintain a cap? Are service credit policies industry?

Let me know your thoughts.

Thanks!

Here is what I have done in the past.  If someone was rehired within 5 years then we readjusted their original hire date to reflect the time that they were not with the company.  Here is an example - X was hired on 6/1/05 and terminated on 1/1/08.  X was rehired on 4/1/08. The new adjusted hire date is 9/1/05 because the person was not employed with the company for 3 months.  We would apply this new adjusted hire date (9/1/05) for non-ERISA related benefits (sick, vacation, personal time, and service awards).  The second rehire date of 4/1/08 would be used for eligibility for ERISA related benefits (medical, dental, vision, etc.). 

For retirement (401k and pension) plans, you need to look at the "break in service"/rehire rules in the plan documents for each plan. They can be different than those for other benefits (vacation, medical/dental eligibility, etc)