How does annual leave work in Australia?

Four weeks a year for full-time and part-time employees, building up from day one. How annual leave accrues, leave loading, cashing out and the payout when you leave.

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Full-time and part-time employees in Australia get 4 weeks of paid annual leave a year under the National Employment Standards, worked out on their ordinary hours. It builds up gradually from your first day, and any unused leave rolls over to the next year. Casual employees don't get paid annual leave.

Awards, enterprise agreements and other registered agreements can give more than 4 weeks. They can't give less.

How much annual leave do you get?

Four weeks of your ordinary hours each year. For someone working 38 hours a week, that is 152 hours.

Some shiftworkers get an extra week. That applies when your award or enterprise agreement has shiftwork provisions and defines shiftworkers as employees who receive the additional week under the NES.

How does annual leave accrue?

Annual leave starts accumulating on your first day, including during a probation period, and builds up gradually through the year. On 38 hours a week, that is about 12.7 hours a month.

It keeps accumulating while you are on paid leave, such as paid annual leave, paid sick and carer's leave, paid family and domestic violence leave, community service leave including jury duty, and long service leave. It doesn't accumulate during unpaid leave, including unpaid parental leave. Government Paid Parental Leave isn't counted as paid leave, so annual leave doesn't build up while you receive it during unpaid leave from your employer.

How does annual leave work for part-time employees?

You get 4 weeks of your own ordinary hours. The Fair Work Ombudsman's example is a part-time employee on 20 hours a week, who accumulates 80 hours of annual leave over a year. Our guide to calculating a pro rata salary shows how part-time pay and leave scale with your hours.

What is annual leave loading?

Leave loading is an extra amount paid to some employees on top of their base pay when they take annual leave. Whether you get it, and how much, depends on your award or enterprise agreement.

In the Fair Work Ombudsman's example, a shiftworker under the Storage and Wholesale Award gets the higher of 17.5% of his minimum pay rate or his usual shift loading. Annual leave itself is paid at your current base pay rate, which leaves out overtime, penalties, allowances and bonuses, unless your award or agreement sets a different method.

What does leave loading add up to?

Say your base salary is $91,000, which is $1,750 a week, and your award gives a 17.5% loading. A week of annual leave pays $1,750 plus $306.25 in loading, which is $2,056.25 before tax. Without a loading clause, the week pays $1,750.

Can your employer refuse or direct annual leave?

You need to ask before taking annual leave, usually through the process set out in your award, agreement, company policy or contract. An employer can only refuse a request if the refusal is reasonable. There is no minimum or maximum amount you have to take at once, so a part day, a single day or several weeks all work if you both agree.

An employer can only direct you to take annual leave in some situations, which awards and registered agreements set out. The Fair Work Ombudsman gives two examples, a Christmas and New Year shutdown and an employee who has built up excess leave.

Can you cash out annual leave?

Only if your award or enterprise agreement allows it, or by written agreement with your employer if you are award and agreement free. Under most awards

  • you must have at least 4 weeks of annual leave left after the cash out
  • you need a signed written agreement stating how much leave is cashed out, how much you will be paid and when
  • you can't cash out more than 2 weeks in any 12 month period.

The payment must equal what you would have been paid for taking the leave. Your employer can't force or pressure you to cash it out, and not every award allows it.

What if you get sick on annual leave?

You can use your paid sick or carer's leave instead of annual leave for those days. Your employer can still ask for notice and evidence, the same as for any sick leave, and can't direct you to take annual leave while you are on sick or carer's leave.

What happens to unused annual leave when you leave?

It is paid out in your final pay. The payment must equal what you would have received for taking the leave, including leave loading if you would have got it, even where an award, agreement or contract says otherwise. Most awards require final pay within 7 days after your last day.

If you are made redundant, unused annual leave comes on top of any redundancy pay. The ATO says a lump sum for unused annual leave is not an employment termination payment, and you may pay tax on it at a lower rate than your other income.

This is general information, not legal or financial advice.

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