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Exchange annual holiday entitlement for payment (cashing up annual holidays)

Can an employee exchange their annual holiday entitlement for payment (cashing up annual holidays)?

Yes. From 1 April 2011 employees are able to ask their employer to pay out up to one week of their annual holidays in each entitlement year.

This can only be at the employee's request. Employees may request to cash up less than a week at a time. More than one request may be made until a maximum of one week of the employee's annual holiday is paid out in each entitlement year.

However, employees cannot cash up annual holiday entitlements that arose before 1 April 2011. For example, an employee who becomes entitled to annual holidays in March 2011 could not make a request to cash up until they next become entitled to annual holidays in March 2012.

If an employer agrees to pay out a portion of the employee's annual holidays, the payment should be made as soon as practicable, such as the next pay day. The value of the payment must be at least the same as if the employee had taken the holidays.

There are other details that employers and employees considering cashing up holidays may need to know, for example how it affects superannuation payments,  working for families, child support and income tax and what happens when there is parental leave. The Department of Labour can assist with information about parental leave on 0800 20 90 20. For tax related matters please contact Inland Revenue on 0800 277 774 or go to www.ird.govt.nz.

Further information on annual holidays.

Date Modified: Tuesday, 29 May 2012

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