1. No, they are not owed any additional vacation/time off.
2. Yes, a limit on unpaid time off should be added to the contract; however, there is leave that would be outside of this, such as family care, etc. As well, it is important to keep in mind that you cannot terminate for an employee being sick, but you can terminate for an employee having attendance and performance issues – sometimes the line can be grey, but it is important to keep that in mind when documenting limits on unpaid leave.