DOL Q&A on the Holiday Amendment Act 2010

Please confirm if only leave that becomes entitled on or after 2010 can be cashed out, and not leave entitled prior to this date no matter how large the leave balance from previous years. (Also, what if the leave is left over from 2005 – before the 4 week minimum entitlement)


Only annual holidays the employee becomes entitled to from 1 April 2011 may be cashed up.  For example, if an employee is entitled to four weeks’ annual holidays on 1 June 2011, the employee will be able to request their employer to pay-out up to one week of the four weeks’ annual holiday entitlement they received on 1 June 2011.  Leave accumulated from previous years cannot be cashed out.


*         Please confirm if the cash-out can be done for a maximum of 1 week of statutory entitlement


Yes.  Up to one week of statutory entitlement.


*         If employee has taken some leave whilst accrued, can the leave payout be taken as standard once the remainder rolls over on the anniversary? Will only 1/4th of the entitled, rolled over amount be considered for payout?


We’ve interpreted this as if the employee was able to take some of their accrued leave in advance before their anniversary date and entitlement to four weeks annual holidays (for example taking one week, therefore leaving them with a balance of three weeks on their anniversary date), would they be only allowed to cash up ¼ of their entitlement (eg ¼ of 3 weeks).


The answer to that is no.  In this instance the employee can request to cash up to one week of their remaining entitlement.



*         Can the Cashout be done in Hours/ Days or must it be done as a block of 1 week only?


A request to cash up is intended to be treated no differently than a request to take annual holidays.  Employees can take annual holidays in hours and days now and is it intended that the same flexibility applies to cashing up annual holidays.  Employees and employers can decide what amount of annual holidays is to be cash-up, up to a maximum of one week.  An employer may decline a request to cash up, without having to provide a reason.


*         Can an employer who has previously offered cashouts change their policy (for example, if financial burden on the business is too high due to this).


Yes.  An employer may decline a request to cash up, without having to provide a reason.


*         Can an employer decline to cashout some employees leave but not others, based on a case by case basis?




*         Define a week for the statutory entitlement in case of variable hours


Currently an employer and employee need to agree on how an employee’s entitlement to four weeks annual holidays is to be met (particularly for employees who work non standard weeks or variable hours) based on what genuinely constitutes a working week for the employee.  Therefore the definition of a working week is what is agreed between the parties.


*         Does a minimum balance apply. For example, employee’s anniversary falls on 2nd April & he gets 4 weeks leave. He takes 1 week leave. Can he then cash out another week?


No, a minimum balance does not apply.  In the example provided the employee can take one week’s leave and then cash up one week.  However an employee can only cash up a maximum of one week of annual holidays every entitlement year.


*         Can the employee cash out multiple years leave? For example, the employee is getting married in 2013 so he saves up his leave. He has 2 weeks left over from 2010, 2011, 2012. Can he cash out 3 weeks for these previous years in 2013?


No.  An employee may only cash up one week per entitlement year.


*         If the employee can cash up leave from previous years, then what restrictions apply? For example, an employee works full time, and has a leave anniversary on 9th April. In 2010, she is entitled to 20 full days leave on her anniversary. Her leave balance shows as 160 hours (40 hours available to cash out).


In 2011, she switches to part time work (Half of previous), so on 9th April 2011 she gets 80 hours leave (20 hours available to cash out).


However, can she cash out 60 hours or will this be in excess of her ‘current’ statutory minimums?


An employee cannot cash up leave from previous years.


In the example the employee becomes entitled to four weeks annual holidays on 9 April 2011.  In hours this means 80 hours leave.  The employee can cash-up up to 20 hours of this leave.  The rate of pay for the cashed up leave is the same as if the employee took the leave as annual holidays i.e. the greater of the employee’s ordinary weekly pay (part time rate) or average weekly earnings (which incorporates her full time rate)


*         As an employee I have cashed out an amount of my annual leave. At what rate am I taxed?


At whatever the applicable marginal tax rate is.


*         As an employee, I work  every week for 40 hours, 5 days a week. I am paid weekly. In the past 12 months, I have taken 8 weeks leave without pay. My gross for the year is $40,000. What is my Average Daily Pay (ADP) when working out sick leave?


In this instance, the employee appears to work regular hours without any variation in their pay period.  Unless it is not possible or practicable to determine an employee’s relevant daily pay or the employee’s daily pay varies within a pay period, the employer must pay the employee’s RDP – what they would have received had they worked on the day.  In this situation ADP does not apply.


*         As an employee, I work  variable hours – it is not practical to work out my relevant daily pay. I am paid weekly, with my weekly gross being $600. 2 weeks ago I received a non-discretionary bonus of  $10,000. I take a day off sick. Is my sick leave rate based on


o        The last four weeks earnings OR


o        My average daily pay (ADP)


ADP. The four weeks earnings calculation will be replaced completely by ADP on 1 April 2011.


Section 3 is a bit confusing, I can read it 2 ways:


1.       The gross earnings for the previous 52 weeks should exclude any amounts added by earning time and a half on a public holiday ( exclude the extra “half”!?)


2.       Its just a “clarification” as under section 9 and doesn’t apply to the average calculation.


It’s a clarification, as under current section 9(3).  An employee is only entitled to T1.5 if they work on the public holiday.

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