Cashing Up Leave - Guide for Managers
Applies to: all TWL Team Members
What is Cashing up Leave?
In certain circumstances team members can ask to cash up leave instead of taking it - see below for what can be done.
Why is it important to get this right?
First and foremost we should be allowing and planning for team members to take their leave so they are rested and fit for work. Cashing up leave is a last resort and should only be at the team member's request. We should not coerce anyone into cashing up leave.
Annual leave
As from 1 April 2011, up to one week of annual
leave in each entitlement year that finishes after 1 April 2011 may be cashed
up.
The current company policy is to allow this to occur.
Entitlement year means the 12 month period beginning from the first anniversary of your employment.
Example:
- Joan started work 1 June 2010. (1 June is now her leave anniversary date).
- Joan accrues leave in the year through to 31 May 2011. In the year that the leave is accruing there is no actual entitlement to leave until the year is completed. Taking leave in advance is by mutual agreement.
- From 1 June 2011 Joan is entitled to 4 weeks annual leave. At her request she can then at any time between 1 June 2011 and 31 May 2012 ask to cash in up to one week of those 4 weeks.
FAQ's
Can team members carry leave over into the next year and cash it up then?
Only one week can be paid out in each entitlement year. It doesn’t matter if it is carried over or is from the current entitlement year – it can only be one week per year.
Example
- Jim starts work 1 June 2010 (1 June is now his leave anniversary date).
- Jim accrues leave in the year through to 31 May 2011. In the year that the leave is accruing there is no actual entitlement to leave until the year is completed. Taking leave in advance is by mutual agreement.
- From 1 June 2011 Jim is entitled to 4 weeks annual leave.
- Between 1 June 2011 and 31 May 2012 Jim takes 2 weeks as annual leave and carries over 2 weeks to the next entitlement year. He can’t then ask to cash up both of the weeks he has carried over into the next year - he can only cash up one.
- If Jim wanted to cash up 2 weeks he should have cashed up one week between 1 June 2011 - 31 May 2012 and then another between 1 June 2012 and 31 May 2013.
Can the team member cash up less than 1 week?
Yes, they can cash up annual leave in periods of one day or more up to a maximum of 1 week. We will not cash up a period of less than one (1) day.
Some team members work different hours each week. How is one day or the week calculated?
By law annual holiday pay is paid at the greater of:
(i) ordinary weekly pay at the beginning of the annual holiday; or
(ii) average weekly earnings for the 12 months immediately before the annual holiday.
This same formula applies to cashed up annual leave.
If a team member is already employed when can they cash up a week’s leave?
When the team member reaches their next annual leave anniversary date AFTER 1 April 2011.
Examples:
- Vanessa’s leave anniversary date is 1 October.
- Vanessa can cash in up to one weeks leave AFTER 1 October 2011 and must do so by 30 September 2012.
- Although Vanessa still has one week untaken of the 4 weeks leave that she became entitled to on 1 October 2010 she cannot cash that up.
- Pania’s anniversary date is 1 February.
- Pania can cash in up to one weeks leave AFTER 1 February 2012 and must do so by 31 January 2013.
- Murray’s anniversary date is 15 April.
- Murray can cash in up to one weeks leave AFTER 15 April 2011 and must do so by 14 April 2012.
What about team members on parental leave?
The same rules apply i.e. they can ask to cash up one week of leave from their anniversary date that falls after 1 April 2011.
However, team members should not request this while they are getting Parental Leave Payments from the IRD during the first 18 weeks parental leave.
Note that as with taking the annual leave, leave that falls during a period of parental leave is paid at the rate of average earnings only and may be lower than the team member’s ordinary rate.
Long Service Leave
This is the leave that team members become entitled to after 10, 20 and 30 year’s service.
It is a 4 week one-off period of leave for each of the anniversaries.
Team members who have become entitled to long service leave after 1st September 2018 cannot cash up this leave. Anyone who had long service leave prior to this date can cash up till August 2019.
Note that this leave can be affected by the number of hours /days the team member works per week as this leave is calculated on a weekly basis.
If the number of days the team member works per week reduces between the date s/he qualifies for the leave and the date s/he actually takes it this can impact on what is paid out /allowed as leave.
Example
- Mary works 5 days per week, 8 hours per day so the long service leave for 4 weeks = 160 hours
- 3 years after qualifying for the long service leave Mary reduces her hours to 2 days per week, 8 hours per day. With this change the leave reduces to match the weekly hours so 4 weeks leave now equals 64 hours.
The reverse applies also:
- Doug works 3 days per week, 7 hours per day so the long service leave for 4 weeks = 84 hours.
- 5 years after qualifying or the long service leave Doug increases his hours to 4 days per week, 7 hours per day. With this change the leave increases to match the weekly hours so 4 weeks leave now equals 112 hours.
If a long serving team member is looking to reduce their days then check before they do so and let them know the impact on any outstanding long service leave. They can either then take the leave or have it cashed up before they change their days of work.
Alternate Holidays
These are also known as lieu days and are earned when a team member works on a public holiday that would otherwise be a normal working day for them.
12 months after the team member has earned the Alternate Day s/he can apply to cash it up. If s/he does not take the Alternate Day as leave during the first 12 months or apply to cash it up after 12 months, then their manager can direct them to take the alternate day.
FAQ's
What day of their Working Week can the team member use when they take an Alternate Day?
Which day is taken is mutually agreed with the manager.
Can I make a team member who has a high amount of leave outstanding cash up some of that?
No Any request to cash up must be from the team member. We cannot make someone do so.
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