Everyone
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
Any person, whatever their age, who is employed by an employer to do any work for hire or reward under a ‘contract of service’ (commonly called an ‘employment agreement’). An individual or organisation that hires 1 or more employees and contracts them to work in exchange for wages or salary under a ‘contract of service’ (commonly called an ‘employment agreement’). Exchanging paid annual holidays for money. Employees can ask their employer to pay out up to 1 week of their 4-week entitlement to annual holidays each year. Paid time away from work for rest and recreation.
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.
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.
Employer can have a workplace policy
An employer can have a Workplace policies and procedures explain the rules and expectations in the workplace.
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.
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
employment agreement. A written document setting out the terms and conditions of employment agreed by the employer and employee (also known as a ‘contract of service’). It can include other contractual documents and agreements made by the employer and employee. Every employee must have a written employment agreement.
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.
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.
The employer may also face a A fine for breaking the law. The amount of the penalty depends on whether the employer is an individual or a company and how serious the breach is. The tribunal established under the Employment Relations Act to resolve employment relationship problems.
Penalties can be up to $10,000 per An act of breaking a law, promise, agreement or relationship.
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 Time an employee who is having a baby or becoming the primary carer of a child under the age of 6 can take off work to care for their child. There are 4 main types of parental leave: primary carer leave, partner’s leave, extended leave, and negotiated carer leave.
For more information about parental leave and associated entitlements, visit:
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.