An employee can cash in up to one week of Annual Leave each employment year. There are a number of rules and regulations surrounding cashing up annual leave, which are covered in this support article from MBIE. It's best to familiarise yourself with these rules before cashing up annual leave for your employees.
To cash up annual leave in PayHero, simply create a draft pay and edit the pay for the employee who is wishing to cash up annual leave.
Under Earnings click the and include the Annual Leave Cashed Up pay item. Enter the appropriate amount of days wishing to be cashed out and PayHero will determine the rate it will be paid out at.
For more information on how this rate is determined, click the button next to the pay rate.
If an employee has taken time off as leave, always use Leave Requests and the Annual Leave Taken pay item instead.
Frequently Asked Questions
Cashing up annual leave will be taxed as a lump sum payment, as it's an additional amount they're being paid on top of their normal earnings. This means it will be taxed based on their highest tax threshold.
See this article from the IRD for more details.
No. The Work Days on the pay are used for calculating employee leave rates, and cashed up leave doesn't affect these rates. As a result, the Work Days should reflect any days in the pay period the employee is being paid for other earnings and leave, but not any cashed up leave.
You can learn more about Work Days here: What are Work Days?
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