Have you been working a lot lately and not had the chance to take as many holidays as you’d like?
Wish you could get some of that accumulated annual leave paid out to you instead?
The good news: you can ask your employer to convert some of your annual holidays to cash. The law requires your employer to give fair consideration to your request.
The not so good news: you can’t ask to cash up all your accumulated leave. And your employer doesn’t have to agree to your request. So there are no guarantees.
The point of annual holidays is to give you a break from work. You need that time to refresh and get away. It’s good for you, and good for business.
But if you’ve ended up with more annual holidays than you know what to do with, here’s how you might get some of it paid out.
HOW ANNUAL HOLIDAYS ARE USUALLY PAID
Unless you’re employed for a fixed term of 12 months or less, or are genuinely a casual employee, your annual holidays are usually only paid to you if:
- You take a holiday and get paid while away from work; or
- You leave your employment, and your remaining holiday balance gets paid out.
I have written elsewhere about how to calculate annual holiday pay.
ONE WEEK CASHED UP
In 2011 the law changed to provide a third way you can get paid for your holidays. Now you can ask to have a portion paid out to you, without taking a holiday.
There are some rules affecting how this works:
- You can only request a payout of up to one week of your annual holidays entitlement each year. You can ask for less than this, and even make several requests throughout the year if you wish. But your total payout during a single year maxes out at one week’s pay.
- The request must be your own idea. Your employer can’t demand you make it, and it cannot be a term of your employment that you get paid out each year.
HOW TO MAKE THE REQUEST
There is no standard form you must follow to make the request. The only condition is that your request be in writing. That could be by way of a letter to your employer, but an email is also fine.
Here’s what you might say in your request:
Dear [employer’s name]
I would like to request that I be paid out one week of my annual holiday entitlement for the current year.
Please can you consider this request and respond within a reasonable time in accordance with your obligations under the Holidays Act 2003.
[Insert your name]
HOW YOUR EMPLOYER MUST RESPOND
Just as there is no form you must follow when making your request, neither does your employer have to keep to a particular form. But they must:
- consider your request within a reasonable time; and
- tell you in writing whether they agree.
If they agree, then they have to pay your holidays out to you as soon as practicable after telling you so.
If they don’t agree, they don’t have to give an explanation why not. They can simply say, “I don’t agree with your request.” Of course, it would be helpful if they did give an explanation, because good communication leads to better relationships. But they are not breaking the law if they do not.
The fact that your employer doesn’t have to agree may make this seem like an exercise in futility. Why make the request if your employer can refuse point blank and even avoid providing a reason?
You can’t assume all employers will decline. For some employers, the ability to pay out some holidays will be attractive. Accrued annual holidays represents a liability on their accounts. If they have the cash on hand, they may prefer to reduce that liability (which increases over time). Meanwhile, they can keep you on the job and maintain productivity.
In fact, because this may be attractive to employers, the law protects you from your employer demanding that you cash up your leave. You must make the request freely, without coercion.
So feel free to make the request. You don’t know how your employer will respond until you do so. Who knows, you may end up with a little extra cash for a rainy day.
Have you made a request to be paid out your annual holidays? How did your employer respond?