• 7 May - PAYE (5th on weekend)
  • 7 May - GST, Prov Tax
  • 21 May - PAYE, RWT, N-RWT (20th on weekend)
  • 28 May - GST, Prov Tax
  • 31 May - RWT, FBT

Payroll News for Employers
Important Changes to the Holiday Act
Legislative changes to the Holidays Act have come into force from 1 April 2011. These changes will have a significant impact on how you manage your employment obligations and calculate your payroll liabilities. The main changes to the legislation have been summarised below. In this edition of Payroll News we will look at the Annual Leave Cash Up, transfer of Public Holidays and when Employers can direct Employees to take annual leave in more detail.

Summary of Changes:

  • An amendment to the Act now clarifies the definition of employee allowances.
  • The Act now allows employees and employers to agree to paying out up to one week of an employee’s entitlement of annual leave at the request of the employee.
  • The Act also allows employees and employers to agree to transfer a public holiday to another working day.
  • Employers now have the right to direct an employee when to take their alternative holidays, should they have a disagreement on when it should be taken.
  • Employers can now request an employee to provide proof of sickness or injury within three consecutive days (including weekends) of an employee requesting sick leave, without first having reasonable grounds that the sick leave taken is not genuine.
  • The definition of a “discretionary payment” has been widened.
  • The trial period option is now open to all employers to use. This requires a specific clause in an employment contract and only refers to new employees after 1 April 2011.
Annual Leave Cash Up
From 1 April 2011, employees are able to ask their employer to pay out up to one week of their minimum entitlement to annual holidays per year. This change to the Holidays Act will be important to employers and employees especially where significant levels of annual leave entitlements have accrued over the years.

Cashing up annual holidays can only be at the employee’s request and the request must be made in writing. More than one request may be made until a maximum of one week of the employee’s annual holidays is paid out in each entitlement year (the period of 12 months’ continuous employment from the anniversary of the employee’s starting date).

If an employee has already taken some of their accrued annual leave for the current year, then the cash up portion must come from the balance of leave available. It can not be paid from annual leave in advance.

The Amendment Act introducing cashing up annual holidays provides that a request may be made only in relation to an entitlement year that begins on or after 1 April 2011.  Employees can not cash up annual leave entitlements that arose before 1 April 2011.

Any request by an employee must be considered within a reasonable timeframe. The employee must be advised of the decision in writing and the employer is not required to provide a reason for their decision.

An employer cannot pressure an employee into cashing up holidays. Cashing up cannot be raised in wage or salary negotiations or be a condition of employment.  Requests to cash up cannot be included in an employment agreement.  However, an employment agreement may outline the process for making such a request. The process must meet the minimum requirements set out in the legislation.

If an employer is found to have incorrectly paid out a portion of the employee's annual holidays where the employee did not request it, the employee is still entitled to use the days of annual holidays concerned and keep the money which in effect leaves the employer paying twice. The employer may also face a penalty in these circumstances.

Record keeping is important for cashed up leave. Your records must show the actual dates leave is taken, not the week ended when the leave has been recorded in the payroll system.  If you would like assistance with these changes please contact McCulloch & Partners Payroll Manager, Loretta Wood.


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  • An amendment to the Act now clarifies the definition of employee allowances.
  • The Act now allows employees and employers to agree to paying out up to one week of an employee’s entitlement of annual leave at the request of the employee.
  • The Act also allows employees and employers to agree to transfer a public holiday to another working day.
  • Employers now have the right to direct an employee when to take their alternative holidays, should they have a disagreement on when it should be taken.
  • Employers can now request an employee to provide proof of sickness or injury within three consecutive days (including weekends) of an employee requesting sick leave, without first having reasonable grounds that the sick leave taken is not genuine.
  • The definition of a “discretionary payment” has been widened.
  • The trial period option is now open to all employers to use. This requires a specific clause in an employment contract and only refers to new employees after 1 April 2011.
Annual Leave Cash Up
From 1 April 2011, employees are able to ask their employer to pay out up to one week of their minimum entitlement to annual holidays per year. This change to the Holidays Act will be important to employers and employees especially where significant levels of annual leave entitlements have accrued over the years.

Cashing up annual holidays can only be at the employee’s request and the request must be made in writing. More than one request may be made until a maximum of one week of the employee’s annual holidays is paid out in each entitlement year (the period of 12 months’ continuous employment from the anniversary of the employee’s starting date).

If an employee has already taken some of their accrued annual leave for the current year, then the cash up portion must come from the balance of leave available. It can not be paid from annual leave in advance.

The Amendment Act introducing cashing up annual holidays provides that a request may be made only in relation to an entitlement year that begins on or after 1 April 2011.  Employees can not cash up annual leave entitlements that arose before 1 April 2011.

Any request by an employee must be considered within a reasonable timeframe. The employee must be advised of the decision in writing and the employer is not required to provide a reason for their decision.

An employer cannot pressure an employee into cashing up holidays. Cashing up cannot be raised in wage or salary negotiations or be a condition of employment.  Requests to cash up cannot be included in an employment agreement.  However, an employment agreement may outline the process for making such a request. The process must meet the minimum requirements set out in the legislation.

If an employer is found to have incorrectly paid out a portion of the employee's annual holidays where the employee did not request it, the employee is still entitled to use the days of annual holidays concerned and keep the money which in effect leaves the employer paying twice. The employer may also face a penalty in these circumstances.

Record keeping is important for cashed up leave. Your records must show the actual dates leave is taken, not the week ended when the leave has been recorded in the payroll system.  If you would like assistance with these changes please contact McCulloch & Partners Payroll Manager, Loretta Wood.