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Annual Leave Loading

Annual Leave

26 Feb 2026 (Last updated 26 Feb 2026)

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What is annual leave loading?

Leave loading or holiday leave loading means an employee taking annual leave is entitled to an extra payment on top of their base rate of pay either upon the commencement or during a period of annual leave.

While the loading amount (if any) varies depending upon the industrial instrument which covers the employee’s employment, it is often 17.5% of their base rate or their usual rate of pay. However, the loading may be equal to a shift loading or the weekend penalty rate, whichever is higher, depending on when the leave is taken. Not every employee is entitled to leave loading.

The National Employment Standards (NES) – a set of standards that form part of the Fair Work Act 2009 and apply to all employees covered by the national workplace relations system – prescribe a minimum of four weeks paid annual leave per year for full-time and part-time employees regardless of any award, agreement or contract.

Eligibility

Eligibility for annual leave loading and the loading that applies is derived from the award or enterprise agreement that applies to the employee. If they are not covered by an award or registered agreement, then an employment contract with the employer may provide for annual leave loading.

Employees under many Modern Awards or registered agreements are entitled to a loading when the employee takes paid annual leave. If the employee doesn’t fall under a relevant Award or registered agreement, they will be paid at their base pay rate or the rate at which they are usually paid.

A full-time employee is entitled to four weeks annual leave per year based on their ordinary hours of work up to 38 hours a week. Part-time employees are entitled to pro-rata paid leave according to the number of hours they work. Shift workers may be entitled to more. Whether or not an employee is a shiftworker will depend on the definition in the relevant award or registered agreement that applies to that employee.

It is also important to remember that unless it is otherwise provided by an industrial instrument, annual leave loading is payable on all accrued annual leave when it is taken by the employee. Meaning that it is not restricted to just the current year’s accrual, as untaken annual leave carries over from year to year.

Annual Leave Loading on Termination

In the case of an employee’s termination, that employee must be paid out their remaining unused annual leave, and annual leave loading on top if they are entitled to it. If an employee is entitled to annual leave loading during their employment, it also has to be paid out when employment ends.

However, some employees may receive an annual salary or an all-inclusive hourly rate that incorporates annual leave loading, in which case it does not need to be paid separately. Whether it is included in the salary amount or forms part of an hourly rate will usually be stated in the employment contract.

Annual leave loading on termination is paid out even when an award, registered agreement or employment contract says that it’s not as the entitlement is based on a provision of annual leave on termination within the Fair Work Act 2009. The provision states that if an employee is terminated and they have a period of unused annual leave, they must be paid out what they would have been paid had they taken that period of annual leave.

Payment

An employee must be paid at least their base rate of pay for the hours they ordinarily would have worked during a period of annual leave up to 38 hours a week, unless their award, registered agreement or contract provides a greater entitlement. The base rate of pay generally does not include penalties, allowances, loadings or bonuses.

The applicable award or registered agreement may provide for a different method of payment for annual leave and will determine whether employees may be entitled to be paid annual leave loading on top of their base pay rate when they take annual leave and how it should be applied.

Some awards stipulate employees get paid the higher of the following, calculated over the whole period of leave that is taken:

  • a 17.5% loading on the employee’s base rate of pay for the job they do under the award classification for the ordinary hours they would have worked if they weren’t on leave; or
  • the employee’s normal (over-award) rate of pay for the hours they would have worked if they weren’t on leave plus 17.5% loading; or
  • the weekend penalty rates the employee normally gets if they would have worked (plus shift loading if the employee is a shiftworker).

Pro-rata Annual leave

Annual leave is accrued on a pro-rata basis. This means if you work half a year, you will be entitled to half your annual leave.

If you receive your leave loading on a pro-rata basis, the leave loading payment will be added to your earnings for this period and will be taxed accordingly.

Please note we cannot guarantee or accept any liability for the accuracy, reliability, currency, or completeness of the information available in this guide. When considering the information available about awards or pay rates, you should contact employment relations experts. Alternatively, you may wish to get independent advice from a legal professional based on your circumstances.

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