04.08.2020

Cancelled Plans and Future Liabilities: A post lockdown annual holidays FAQ

COVID-19 has not only hit many employers hard in terms of economic impact, it has also confronted employers with many employment challenges that require urgent attention.

In regard to annual holidays, employers have been dealing with employees’ cancelled holidays, adjusted holidays, and annual holiday liabilities on the books. Below we answer your annual holiday questions.

  1. When does an employee become entitled to annual holidays?

    The Holidays Act 2003 (HA03) provides that an employee is entitled to a minimum of four weeks’ paid annual holidays after each completed 12 months’ of continuous employment.

    Under the HA03, annual holidays do not ‘accrue’ during employment despite what the payroll system might say.  If an employee wants to take annual holidays when the employee does not have an entitlement, the employee will need to request to take an agreed portion of the entitlement in advance.

    The HA03 does not prevent an employer from providing an employee with enhanced or additional entitlements.  For example, if the employer wants its employees to receive an annual holidays entitlement from the start of employment or give employees more than four weeks’ paid annual holidays, it is welcome to do so.

  2. When can an employee take annual holidays?

    An employer must allow an employee to take annual holidays within 12 months after the date on which the employee’s entitlement to the holidays arose.

    When exactly the annual holidays are to be taken is to be agreed between the employee and the employer.  Often, an employment agreement or workplace policy will have a process for requesting holidays, and having them approved.

    If an employee elects to do so, the employer must allow an employee to take at least two weeks’ annual holidays in one block.

  3. Can an employer cancel an employee’s annual holidays that have already been agreed?

    Generally speaking, the answer is ‘No’. If an employee’s request to take annual holidays is approved, subsequent revocation of the approval would be unlawful. However, it is important to look at the wording of the employment agreement and to exercise the parties’ obligation to act towards each other in good faith, and to try and reach agreement where possible.

  4. Can employers direct employees to take annual holidays?

    Yes, an employer may require an employee to take entitled annual holidays if the employer and employee are unable to reach an agreement about when the employee will take his or her annual holidays. The employer must give the employee at least 14 days’ notice when directing the employee to take annual holidays.

  5. Can an employer direct or require an employee to take annual holidays in advance?

    No, annual holidays in advance can only be taken by agreement. An employer cannot direct or require an employee to take annual holidays in advance, not even with notice.

  6. Can an employee top up his or her salary with holiday pay or be paid holiday pay for a portion of the employee’s remuneration?

    No, an employee must be on annual holidays to receive holiday pay. An employee cannot work and be on annual holidays at the same time.

  7. When can an employee cash up annual holidays?

    Annual holidays can only be cashed up:

    • If the employee asks in writing; and
    • If the annual holidays are entitled holidays; and
    • To a maximum of one week’s worth of annual holidays in each entitlement year.

    If an employee makes a request the employer must:

    • Consider the request within a reasonable time; and
    • Advise the employee in writing if the requested is agreed to or not.

    If the request to cash up annual holidays is agreed to by the employer, the employer must pay the employee as soon as practicable, for example, in the next pay run. An employer may decline the employee’s request to cash up annual holidays, and if so, does not need to provide the employee with a reason for declining the request.

Hesketh Henry’s Employment Law Team are experts on the HA03.  If you have any HA03 related query, please get in touch.

 

The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

 

 

 

 

 

 

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Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

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