Guide
Cashing up annual holidays in New Zealand: the one week limit
Updated
Cashing up is allowed, capped, and entirely at the employee's request. Employers cannot suggest it and cannot pressure anyone into it.
One week, each entitlement year
Employment New Zealand states that employees can ask to cash up up to 1 week of their 4 week annual holiday entitlement each year, meaning getting annual holidays paid out instead of taking time off (Employment NZ: cashing up annual holidays). The employee must keep at least 3 weeks they can actually take off work, and employers must not allow more than one week of the minimum entitlement to be cashed up in a year.
You cannot bank it
Employment New Zealand is explicit: it is not possible to save up weeks of annual holidays and cash them up in one go later. An employee who takes no holidays for two years and has 8 weeks owing can still only cash up a maximum of 1 week, and cannot cash up 2 weeks at the same time or in the same entitlement year.
The entitlement year runs from your anniversary
Employment New Zealand's example: an employee who starts work on 1 June 2024 can ask to cash up to 1 week of holiday when they become entitled to annual holidays on 1 June 2025, and can make that request at any point in the entitlement year running from 1 June 2025 to 31 May 2026.
| Situation | Allowed? |
|---|---|
| Employee asks to cash up 1 week of their 4 week entitlement | Yes, and the employer decides whether to agree |
| Employee asks to cash up 2 weeks in one entitlement year | No, the cap is 1 week of the minimum entitlement per year |
| Employee saves 2 years of leave and asks to cash up 2 weeks | No, still a maximum of 1 week |
| Employer suggests the employee cashes up their leave | No, employers must not pressure employees into cashing up |
| Workplace policy says the employer will not consider cashing-up requests | Yes, a policy can say this and it can cover all or part of the workplace |
Cashed-up holidays leave your gross earnings
Employment New Zealand's list of what gross earnings do not include names payment for annual holidays that have been cashed up, for up to 1 week each entitlement year (Employment NZ: calculating holiday and leave pay). That matters, because gross earnings drive average weekly earnings, so cashing up does not inflate the rate for the holidays you do take.
Contractual holidays above the statutory 4 weeks are not covered by the one week cap. Those are governed by the employment agreement, so check what yours says before assuming the limit applies to them.