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4th Week Annual Holiday Payments

Published 01 Apr 2011

The Holidays Amendment Act 2010, which came into force on 1st April 2011, provides employees with the opportunity to request that up to 1 week of their 4 weeks of annual holidays is paid out rather than taken as paid annual holidays.
Employees will be able to request pay out of up to 1 week of annual holidays entitlement, but only for entitlement years that begin after 1st April 2011. This means that no payout can be made until at least 1st April 2012.


An employee starting work for an employer on the 2nd April 2010 would become entitled to 4 week’s paid annual holidays on the 2nd April 2011. The employee may only apply for annual holidays to be paid out on 2nd April 2012 - because it relates to the entitlement year which begins after 1st April 2011.

An employee who became entitled to 4 week’s annual holidays on the 31 March 2011 will have to wait until 31st March 2013 before they will be able to request - because the entitlement year that begins after 1st April 2011, doesn’t begin until 31st March 2012 for this employee.

Policy not to pay out
Employers may introduce a policy that they will not pay out annual holidays.ers fail to implement a policy they must give 'good faith' consideration to the request for a pay out, but the employer does not have to provide reasons for refusal
The policy can only be about whether or not the employer will pay out leave and not about the entitlement to holidays or when employees may apply.

Cashed up annual holiday is a lump sum payment and will fall under the RD 7 (1) meaning of "extra pay"(see RD7 ITA 2007).