Can an employee cash up annual leave?

Employees may request to cash up one week of their four weeks’ minimum entitlement to annual leave every year. An employer doesn’t have to agree.

One week can be cashed-up for each ‘entitlement year’. An ‘entitlement year’ starts on the anniversary of the employee’s start date.

The employee cannot make their first cash-up request until the start of their next entitlement year. So, if an employee starts work on 26 February 2025, they will not be able to request cashing-up until 26 February 2026.

The main thing to remember about cashing-up is that it is an option available to the employee if the employee sees cashing-up as a benefit for them, and if the employer agrees. Cashing-up was not designed to benefit the employer – any benefit for the employer is purely coincidental.

So:

1.    An employer cannot make cashing-up a term of an employment agreement.

2.    An employer cannot even raise cashing-up in negotiations relating to wages.

3.    The cash-up request must come from the employee and they must make their request in writing.

4.    The employer must consider the request within a reasonable time and reply in writing.

5.    The rate of payment is the greater of:

• Ordinary weekly pay or

• Average weekly earnings for the last twelve months

If the above rules are not followed, then any cash-up payment will be treated as if it had not been paid.

If you need advice about any aspect of the Holidays Act, call Workplace Law on (027) 270 1057.