Safeguards will be put in place to ensure employees are not pressured into cashing up their fourth week of leave, rather than taking it as a holiday, the Government says.
The Government is to start work on the law change that will allow workers to be offered money instead of the fourth week of annual leave they are entitled to. The law change putting this policy into effect should be in place by April 2010.
The leave policy was part of the National Party's pre-election manifesto and will form part of a wider review of the Holidays Act.
The Government says employees should have more choice about how they use their leave entitlements, and the extra money could come in handy for some.
But the Council of Trade Unions and the Labour Party say this will see some employees pressured into cashing up the extra leave - especially those on lower incomes.
CTU president Helen Kelly says the move is concerning and equates to putting the fourth week of leave up for sale.
Labour Party leader Phil Goff says the Government is only paying lip service to New Zealanders having a work-life balance and there is no guarantee, especially in these difficult financial times, that employees will be free to make a choice.
Maritime Union general secretary Trevor Hanson says with people lining up for jobs, the policy could give employers unreasonable bargaining power to have staff take only three weeks annual holiday.
Minister of Labour Kate Wilkinson says the Government does not want to see unscrupulous employers take advantage of any employees, and safeguards will be written into the law.
The Tourism Industry Association says many companies in the sector will welcome the idea as a way of removing the liability of annual leave from their balance sheet.