Cashing in Annual Leave
What is RSS?
Feb 2011Employers need to be ready to deal with employee requests to cash in their annual leave entitlement. What do you need to know?
- The law changes on 1 April 2011 – until then the only annual leave that can be paid out to employees by mutual agreement is in excess of the statutory four week entitlement.
- From 1 April an employee can ask to cash in up to one week's annual leave in each year of annual leave entitlement.
- An employee can make more than one request per year as long as the leave being cashed in is not more than one week in total.
- Each employee request must be in writing.
- You must consider each request within a reasonable time.
- You must respond in writing but you don't have to give reasons.
- You can form a policy about the process e.g. only one request per year.
- You can form a policy about dealing with requests e.g. refuse them all unless there are exceptional circumstances.
- You can form a policy that sets criteria e.g. employees must have a minimum of one week's leave entitlement remaining after any cashing in.
- You cannot require an employee to make a request, or include that in an employment agreement.
- If you cash in leave that you should not have, the leave entitlement stays intact and the employee can take it as paid annual leave later.
- If you get it wrong, the maximum penalty for breaching the Act is now $20,000.
Take the opportunity now to consider what policy would best suit your business situation.
For a fact sheet containing the above advice please see the document below.
Prepared by Lesley Brook
