Strapped for cash flow and have a project or purchase coming up? Did you know you can Cash Up one week of your outstanding Annual Leave?
A cash up of annual leave means the employee gets paid one week of annual leave. There are some rules around the cash up though.
The employee must have enough outstanding leave to cover the cash up request and only one week in total can be cashed up in any given entitlement year. The employee can cash up in increments, i.e. a day here and there, as long as no more than one week is paid out. (The week is the employees profiled week).
This portion of annual leave will be deducted from the outstanding annual leave balance.
The payment is not included in Gross Earnings as per the Holidays Act, so not included in subsequent annual leave calculations.
The payment is also considered a lump sum payment, so is taxed as an extra pay. (See the IRD guidelines how to tax the payment).
An employer can not make the employee cash up their leave, the request must come from the employee.
If you need any assistance in this regards, please sing out. Thanks Kerryn