Everyone
Cashing-up annual holidays
Employees can request 1 week of their 4-weeks minimum annual holiday entitlement each year to be cashed-up.
If an employee chooses to, they can ask their employer if they can cash-up 1 week of their 4-week minimum annual holiday entitlement each year and get paid that money instead of taking that 1 week of leave. If the employee and the employer agree to this, the cashed-up amount must be paid as soon as practicable after the employee has agreed to the cash-up.
What employees can do
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’). Paid time away from work for rest and recreation.
They can do this all at once or can make multiple requests to 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.
For example, an employee with an anniversary date of 1 June can request up to 1 week’s holiday that they become entitled to on 1 June in the following year be paid out. Their request can be made at any point in the entitlement year that runs from 1 June to 31 May the following year.
What employers can do
An employer:
- must consider a cash-up request within a reasonable time
- may say no
- must inform the employee in writing
- does not have to give a reason for their decision.
An employer can have a Workplace policies and procedures explain the rules and expectations in the workplace.
What employers cannot do
An employer cannot:
- pressure an employee into cashing-up holidays
- raise it in wage or salary negotiations
- make cash-up a condition of employment
- put a cash-up request into an employment agreement but can include the process for making a request.
Paying out cashed-up annual holidays
If an employer agrees to pay out some of the employee's annual holidays, they need to pay as soon as they can — usually the next pay day (and keep a record of the date and amount paid). The payment must be at least the same amount as if the employee had taken the holidays.
If an employer agrees to pay out some of the employee's annual holidays, but the employer and employee cannot agree on the proportion or payment amount, MBIE’s A warranted employee of MBIE who ensures employment standards are met in the workplace. They can take enforcement action for non-compliance with employment standards.
In the event an employer pays out a portion of the employee's annual holidays, and the employee did not ask for the cash-up or, the employer has not been given a written request to cash-up the annual holidays. The employee is entitled to keep the cash-up money and still take the portion of annual holidays cashed up as paid holidays.
The employer may also face a penalty, which the The tribunal established under the Employment Relations Act to resolve employment relationship problems.
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. An act of breaking a law, promise, agreement or relationship.
Taking parental leave may have an impact on the amount that an employee is paid when they take an annual holiday and how much a cashed-up annual holiday is paid out at.
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.
Inland Revenue has information about the impact that cashing-up annual holidays may have on superannuation payments, working for families, child support and income tax.
Cashing-up additional holidays
If an 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.
If the employment agreement provides 5 weeks per year and that all 5 weeks could be cashed-up, then this would go against the Holidays Act 2003 and the employee would not be able to cash-up more than 2 weeks’ annual holidays even with their employer’s agreement.