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Cashing-up annual holidays

Employees can ask to cash-up up to 1 week of their 4-week annual holiday entitlement each year. Cashing-up means getting annual holidays paid out instead of taking time off from work.

Asking to cash-up

can ask their to up to 1 week of their 4-week minimum entitlement each year and get paid that money instead of taking it as holidays.

Employees can:

  • make 1 request to cash-up the whole week, or
  • make multiple requests until the whole week is cashed-up.

Requests to cash-up must be in writing.

When employees can cash-up

Annual holidays cannot be cashed-up until the employee gets their annual holiday entitlement.

For example, an employee who starts work on 1 June 2024 can ask to cash-up up to 1 week of holiday when they become entitled to annual holidays on 1 June 2025. They can make their request at any point in the entitlement year that runs from 1 June 2025 to 31 May 2026.

Taking annual holidays

Holidays Act 2003 Section 28A - New Zealand Legislation(external link)

Considering requests to cash-up

Employers:

  • must consider a cash-up request within a reasonable time
  • can say no
  • must tell the employee what their decision is and put it in writing
  • do not have to give a reason for their decision.

Managing annual holidays

Employer can have a workplace policy

An employer can have a about cashing-up which can apply to the whole workplace or just parts of it. The policy can say that the employer does not have to consider requests for cashing-up annual holidays. If this is the case, then the above does not apply.

The policy must not:

  • allow an employee to cash-up more than 1 week of their 4-week minimum annual holiday entitlement each year
  • say how many requests to cash-up an employee can make.

Employers who decide to develop a workplace policy about cashing-up should:

  • consult with employees (and unions if applicable)
  • make sure new and existing employees know about the policy.

Creating workplace policies and procedures

Cash-ups cannot be required

Employers must not pressure employees into cashing-up holidays.

Employers and employees must not:

  • discuss a requirement to cash-up as part of wage or salary negotiations
  • make asking for, or receiving, a cash-up a term or condition of employment. This applies to terms and conditions that have been agreed to verbally as well as in writing. However, employers can include a process for making a cash-up request in the

Negotiating and accepting as an employee

Offering and negotiating as an employer

Holidays Act 2003 Section 28C - New Zealand Legislation(external link)

Paying out cashed-up annual holidays

If an employer agrees to cash-up annual holidays, they must make the payment as soon as they can. This is usually the next payday. The payment must be at least the amount the employee would have got if they had taken the holidays.

The employer must keep a record of:

  • the portion of annual holidays cashed-up – for example, the whole week or part of the week
  • the amount of the payment
  • the date the payment was made.

If the employer and employee cannot agree on:

  • the portion of annual holidays that will be, or have been, cashed-up, or
  • the payment amount

we may be able to help and decide for them.

Contact us

If an employer pays a cash-up which the employee did not ask for, then the employee:

  • can keep their entitlement to the annual holidays that were cashed-up, and
  • may be able to keep the cash-up money. Recovering the payment would be treated as a deduction.

Deductions

The employer may also face a which the  can order.

Penalties can be up to $10,000 per if the employer is an individual or $20,000 per breach if the employer is a company or other entity.

To avoid any misunderstandings about whether an employee has asked to cash-up, employers should make sure employees put requests to cash-up in writing.

Parental leave can affect cash-up amount

Taking may affect how much cashed-up annual holidays are paid out at.

For more information about parental leave and associated entitlements, visit:

Parental leave

Cashing-up more than 1 week of holidays

Under the law, employees get a minimum of 4 weeks’ annual holidays each year and only up to 1 of those weeks can be cashed-up. They must have at least 3 weeks of annual holidays that they can take off work. Employers must not allow employees to cash-up more than 1 week of their minimum entitlement each year.

In workplaces where employees get more than the minimum of 4 weeks’ annual holidays, they may be able to cash-up the extra weeks. It depends on what it says in their employment agreement or workplace policy, and if their employer agrees to it.

For example, an employment agreement that provides 5 weeks’ annual holidays each year could allow for up to 2 weeks to be cashed-up. The employee could cash-up:

  • 1 week of their minimum 4-week entitlement, and
  • the extra 5th week.
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