annual leave entitlement

Annual leave is an important part of working life. A proper break away from the workplace can improve employee wellness and increase overall productivity. It gives employees an opportunity to relax and recharge, and return to work with more energy and focus. Annual leave should be planned around the company’s operational needs to avoid understaffing in peak periods.

In 2010, annual leave entitlements became part of the National Employment Standards (NES) and replaced minimum entitlements under the Australian Fair Pay and Conditions Standard. Under the NES, all employees (except casual employees) get paid annual leave, based on their ordinary hours of work.

An employee’s entitlement to annual leave under the NES accrues progressively during a year of service, according to their ordinary hours of work, and accumulates from year to year. An annual leave entitlement that comes from an award or agreement may be different from that provided for in the NES, but cannot be less than the NES entitlement.

annual leave entitlements

How much annual leave is an employee entitled to?

four weeks’ annual leave for each 12 months of service; or

five weeks’ annual leave for some shift workers for each 12 months of service.

Use the leave calculator at www.fairwork.gov.au to calculate personal annual leave entitlements under the NES.

exceptions and caveats:

these entitlements do not apply to casuals

to qualify for the shift work entitlement of five weeks’ annual leave, the employee must either be classified as a shift worker under an award or agreement or, if not covered by an award or agreement, they must meet all of the following criteria:

be employed in an enterprise where shifts are continuously rostered 24 hours a day, seven days a week

be regularly rostered to work those shifts

regularly work on Sundays and public holidays

awards and agreements may provide for additional annual leave entitlements over and above those provided in the NES.

working out pay for annual leave

Under the NES, an employer must pay annual leave at the employee’s base rate of pay for their ordinary hours during the period of leave. This doesn’t include separate entitlements such as incentive-based payments and bonuses, loadings, monetary allowances, overtime or penalty rates. Awards and agreements may provide for annual leave to be paid at a higher rate than required by the NES (for example, payment of annual leave loading in addition to the ordinary rate of pay).

Leave loading is an additional amount paid on top of annual leave pay. It is usually 17.5%  of normal pay, and the award, enterprise agreement, or contract will state if there is a leave loading entitlement. Not all employees are entitled to leave loading. 

On termination of employment, an employer must pay an employee in respect of any accrued untaken paid annual leave. Leave continues to accumulate while employees are taking paid annual leave and paid personal leave. However, leave does not normally accumulate during periods of unpaid leave, such as unpaid parental leave, or unpaid authorised absences.



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