How Annual Leave Works in Australia
Under the Fair Work Act 2009, the National Employment Standards (NES) provide minimum annual leave entitlements for all non-casual employees in Australia. Annual leave starts accruing from the first day of employment and accumulates year to year -- it does not expire.
Annual Leave Entitlements by Employment Type
- Full-time employees: 4 weeks (152 hours based on 38-hour week) of paid annual leave per year
- Part-time employees: Pro-rata based on ordinary hours worked (e.g., 20 hours/week = approximately 80 hours/year)
- Shiftworkers: 5 weeks (190 hours) per year under most awards
- Casual employees: No annual leave entitlement (compensated by 25% casual loading)
Leave Loading Explained
Many awards and enterprise agreements include a 17.5% leave loading -- an extra payment on top of the base rate when annual leave is taken. This was originally introduced to compensate employees who regularly earn penalty rates for the loss of those earnings while on leave. Some awards pay whichever is greater: the leave loading or the penalties/overtime the employee would have earned.
Annual Leave on Termination
When employment ends (for any reason), all accrued but untaken annual leave must be paid out in the employee's final pay. This includes leave loading if applicable under the relevant award or agreement.
Pro Rata Annual Leave for Part-Time Employees
Part-time employees accrue annual leave on a pro-rata basis. The formula is: (ordinary hours per week / 38) x 4 weeks. For example, an employee working 25 hours per week accrues (25/38) x 152 = 100 hours of annual leave per year.