Q: We have an employee who has requested to buy out 8 days of annual leave. We know there is no problem with paying out 5 days of annual leave, however we are querying the extra days. The employee and their manager have agreed to pay out 8 days, but will we potentially get in trouble if we pay out the extra days over and above what the legislation says? We would appreciate your advice.
Are you able to confirm if the first week compensation payable to an employee should have the 1.53% earner’s levy applied as part of the PAYE deduction on this or not?

A: For minimum entitlement only a maximum of a week can be paid out in the current entitlement year.  You cannot pay out entitlement from previous years.  The Holiday Act is a minimum entitlement act which means you cannot contract out of it.  If they paid out the extra 3 days it is a breach of the act and could mean the days have to be provided back to the employee to be used again.

Q: Following your response, I have one further question. If both parties mutually agree (and the employee really wants to cash in all his leave), would that be okay? We are not looking to do the wrong thing, it’s just about finding a solution for the employee. For some context, the employee in question is in some financial difficulty and we want to help him as much as we legally can.

A: You cannot contract out of the act.