Can an employee cash up annual leave?

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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 2018, they will not be able to request cashing-up until 26 February 2019.

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 employee 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 on your rights as an employee, please call Workplace Law on 09 631 5553