My employee wants to ‘cash up’ some of their leave. Is this legal?
Yes, since 2011 employees can request to swap up to 1 week of their annual leave for cash each year — up to 5 days for a regular 5-day week, or one quarter of their annual entitlement if they don’t.
Cashing up annual holidays can only be at the employee’s request and the request must be made in writing, so an employer can’t pressure an employee to cashing up a portion of their leave, nor can it be part of salary negotiations.
An employee can ask to cash in leave multiple times a year, as long as the total they cash in isn’t more than a quarter of their total leave allowance for the year.
What if you’d prefer that your employees take the leave instead? Employers may have a workplace policy that they will not consider any requests to cash up annual holidays. This can apply to the whole or only some parts of the business.
The policy can only address whether the employer will consider any requests. It cannot be about the amount of annual holidays an employee can cash up or the number of requests an employee may make. If you don’t have such a policy for the workplace, you must consider any request to cash up annual holidays in good faith and consider it in a timely manner. Even if requested you still have the right to decline the request, and you don’t need to give a reason why, but you do have to let them know in writing.
What if the employee wants to cash up more than one week per annum of their statutory annual leave – can you agree to that? No! Only a maximum of one week can be paid out from the statutory leave entitlement.