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Cashing out Annual Holidays
May 29, 2023

Cashing out Annual Holidays

New Zealand

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As part of the Holidays Amendment 2010, there is a provision to allow an employee to have up to 1 week of current annual holiday entitlement paid out.

The main points are as follows:

  • An employee has the right to request their employer to pay out a portion of the employee's entitlement to annual holidays.
  • A request must be in writing and may be made on 1 or more separate occasions until a maximum of 1 week of the employee's annual entitlement is paid out in each entitlement year.
  • The leave must be paid at the higher of AWE vs OWP just as if the employee was taking the leave.

The paid-out annual holiday must come from the entitlement year defined as:

  • A period of 12 months of continuous employment beginning on the anniversary of the employee's employment; and
  • Includes a period of 12 months of continuous employment.

When cashing out annual holidays, it is based on current entitlement for the current entitlement year, i.e. available annual holiday entitlements for the current entitlement year. It cannot be taken out of the previous year's annual entitlement or future entitlements/accrual amounts.

Example: The employee's anniversary date is 1 September (1/9), 4 weeks of annual holidays kick in on 1/9/19, and annual holidays cash out of up to 1 week can be requested using the 1/9/19 entitlement. The previous year's entitlement on 1/9/18 cannot be used, the future years yet to accrue in 1/9/20 cannot be used.

Read more here: Cashing Out Annual Holidays using Annual Holiday Entitlement

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