Annual Leave Entitlements in Australia (2026): Accrual, Shiftworkers, Leave Loading, Cashing Out and Payout

Annual leave is the entitlement Australian employees ask about most, and the one small employers most often miscalculate — usually at the end, when someone resigns and the final pay has to include every hour of untaken leave plus the right loading. This guide sets out the 2026 rules in plain terms: how much annual leave the National Employment Standards (NES) give, how it accrues in hours, when shiftworkers get an extra week, how leave loading works under awards, when an employer can refuse or direct leave, the rules for cashing out, and how unused leave is paid, taxed and treated for super when employment ends. Worked examples are in Australian dollars.

Quick answer

Every full-time and part-time employee in the national system gets 4 weeks of paid annual leave per year of service, accruing progressively by ordinary hours and rolling over year to year. Shiftworkers defined by their award or agreement get 5 weeks. Casuals get none. Leave is paid at the base rate, plus any award leave loading (usually 17.5%), and unused leave must be paid out when employment ends.

• Full-time on 38 hours: 152 hours a year; part-time on 20 hours: 80 hours

• Accrues from day one, including during probation and paid leave

• Employer must not unreasonably refuse a request (s 88)

• Cash-outs need a written agreement and must leave 4 weeks in the balance

• Unused leave paid on termination — includes loading, but no super guarantee

Who gets annual leave

Paid annual leave is one of the National Employment Standards in Part 2-2 of the Fair Work Act 2009. It applies to every full-time and part-time employee of a national system employer, whether they're covered by a modern award, an enterprise agreement or are award and agreement-free. Fixed-term employees get it too, for the length of their contract.

Casual employees don't get paid annual leave. Section 87 excludes periods of casual employment, and the casual loading (usually 25%) is designed partly to compensate for that. If a casual converts to part-time or full-time — for example under the employee choice pathway — annual leave starts accruing from the date of conversion, not from the date they first started as a casual. Our casual employees guide explains conversion.

Awards, enterprise agreements and contracts can give more annual leave than the NES, but never less. Many professional employment contracts offer five weeks or extra "wellbeing" days on top of the NES; those terms are contractual and operate alongside the statutory minimum.

How much annual leave: 4 weeks, or 5 for shiftworkers

Section 87(1) gives 4 weeks of paid annual leave for each year of service. It's expressed in weeks, but in practice it's measured in hours, because it accrues "according to the employee's ordinary hours of work". Four weeks for a full-time employee on 38 ordinary hours a week is 152 hours. The Fair Work Ombudsman's example is a part-timer on 20 hours a week, who accrues 80 hours a year — still four weeks of her ordinary hours.

The extra week for shiftworkers

An employee gets 5 weeks instead of four if:

• their modern award defines or describes them as a shiftworker for the purposes of the NES; or
• their enterprise agreement defines or describes them that way; or
• they're award and agreement-free and work in an enterprise where shifts are continuously rostered 24 hours a day, 7 days a week, are regularly rostered to work those shifts and regularly work Sundays and public holidays.

Note that the award definition controls. Working nights or weekends doesn't automatically make someone a shiftworker for annual leave purposes; many awards limit the extra week to seven-day shiftworkers in continuous operations. Check the annual leave clause of the relevant award — the Fair Work Ombudsman's award finder links each award's shiftworker definition.

How annual leave accrues

Annual leave accrues progressively from the first day of employment — including during a probation period — and accumulates from year to year. There is no "use it or lose it" rule in Australian law: leave not taken simply rolls over, although awards contain mechanisms for dealing with very large balances (covered below).

Most payroll systems accrue leave each pay period. For a full-time employee on 38 hours, the weekly accrual is 152 ÷ 52 = 2.923 hours. For any employee, full-time or part-time, the simplest method is 4/52 — that is, 1/13 or 0.0769 hours of leave for every ordinary hour worked. Ordinary hours means rostered ordinary hours, not overtime, so overtime doesn't earn extra annual leave.

According to the Fair Work Ombudsman, annual leave keeps accruing while the employee is on:

• 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 accrue during unpaid annual leave, unpaid sick or carer's leave or unpaid parental leave. Government-funded Paid Parental Leave isn't paid leave from the employer, so it doesn't count either if the employee is otherwise on unpaid leave. And leave doesn't accrue for a period of annual leave that has been cashed out.

Work out an employee's annual leave balance

1. 1

   Confirm the entitlement

   4 weeks for most employees; 5 weeks if the award or agreement defines them as a shiftworker for NES purposes.

2. 2

   Find the ordinary hours

   Use rostered ordinary hours per week (e.g. 38 for full-time). Exclude overtime.

3. 3

   Calculate the annual accrual

   Weekly ordinary hours × 4 (or 5). 38 hours → 152 hours a year; 20 hours → 80 hours.

4. 4

   Accrue each pay period

   Add ordinary hours worked plus paid leave hours × 4/52 (0.0769) — or 5/52 for shiftworkers.

5. 5

   Deduct leave taken and cashed out

   Subtract hours actually taken or cashed out. The result is the balance to report if the employee asks.

Taking annual leave: requests, refusals and directions

Section 88 says paid annual leave may be taken for a period agreed between the employee and employer, and that the employer must not unreasonably refuse a request. There's no minimum or maximum block: by agreement, an employee can take part of a day, a single day or several weeks.

What counts as reasonable depends on the circumstances. Refusing a request for the week of a stocktake, when the employee is one of two people who can do it and the request came in two days earlier, is likely reasonable. Refusing every request for a year because the business is "always busy" isn't. Document your reasons and offer alternative dates.

Two things can happen during leave that change the count:

• Public holidays. Under section 89, if a public holiday falls during annual leave, the employee isn't on annual leave that day. They're paid for the public holiday as normal and the day isn't deducted from the balance.
• Illness. If an employee becomes sick or injured during annual leave, they can use paid sick and carer's leave instead for those days. You can ask for the usual notice and evidence.

Can you make someone take annual leave? For award and agreement-free employees, section 94(5) allows a requirement to take leave only if it's reasonable — the Act's own examples are an excessive accrued balance or a shutdown between Christmas and New Year. For award employees, the award governs: most awards allow a direction during a temporary shutdown with notice, and have an excessive leave process. Under the General Retail Industry Award, for instance, leave is excessive above 8 weeks (10 for shiftworkers), and the award requires the employer and employee to genuinely try to agree on reducing it before the employer can direct leave.

Many awards also allow leave in advance — taking leave before it's accrued — by written agreement, with the agreement kept as a time and wages record. If the employment then ends before the leave is accrued, the award usually allows the employer to deduct the advance from final pay only if the agreement authorised it.

How annual leave is paid, and leave loading

Section 90(1) requires annual leave to be paid at the employee's base rate of pay for the ordinary hours they would have worked during the leave. The base rate excludes incentive payments, bonuses, loadings, monetary allowances, overtime and penalty rates, so under the NES alone, a worker who usually earns weekend penalties is paid only the base rate while on leave.

That's where annual leave loading comes in. It is not an NES entitlement — it comes from modern awards, enterprise agreements or contracts. Most awards provide a loading of 17.5% on top of the base rate. Some use a "greater of" test. The General Retail Industry Award (clause 28.3) pays the greater of 17.5% of the minimum hourly rate for the ordinary hours of leave, or the weekend and other penalty rates the employee would have earned had they worked those hours. Shiftworkers get the greater of 17.5% or their shift penalties.

Award and agreement-free employees get loading only if their employment contract provides it. And because loading sits in awards, check the specific award clause rather than assuming 17.5% applies to everyone.

For super, the ATO treats annual leave payments as ordinary time earnings, so the super guarantee of 12% applies to leave taken. Leave loading is also ordinary time earnings, unless it can be shown to compensate only for lost overtime opportunities. On the payslip, leave hours and loading should be shown as separately identifiable entitlements — see our payslip requirements guide.

Annual leave under the NES vs a typical award

Rule	NES (Fair Work Act)	Typical modern award
Amount	4 weeks (5 weeks for defined shiftworkers)	Same — the award defines who is a shiftworker
Rate while on leave	Base rate for ordinary hours	Base rate + leave loading
Leave loading	None	Usually 17.5% (some awards: greater of loading or penalties)
Cashing out	Only via award, agreement or award-free s 94 agreement	Usually allowed, max 2 weeks per 12 months
Directing leave	Award-free: only if reasonable	Shutdown and excessive-leave clauses
Payout on termination	All untaken leave	All untaken leave + loading if it applies

Amount

NES (Fair Work Act)

4 weeks (5 weeks for defined shiftworkers)

Typical modern award

Same — the award defines who is a shiftworker

Rate while on leave

NES (Fair Work Act)

Base rate for ordinary hours

Typical modern award

Base rate + leave loading

Leave loading

NES (Fair Work Act)

None

Typical modern award

Usually 17.5% (some awards: greater of loading or penalties)

Cashing out

NES (Fair Work Act)

Only via award, agreement or award-free s 94 agreement

Typical modern award

Usually allowed, max 2 weeks per 12 months

Directing leave

NES (Fair Work Act)

Award-free: only if reasonable

Typical modern award

Shutdown and excessive-leave clauses

Payout on termination

NES (Fair Work Act)

All untaken leave

Typical modern award

All untaken leave + loading if it applies

Cashing out annual leave

Cashing out means the employee is paid for leave instead of taking time off. Section 92 says annual leave must not be cashed out except under cashing-out terms in a modern award or enterprise agreement, or under an agreement with an award and agreement-free employee under section 94.

Whatever the source, the minimum rules are the same:

• the cash-out must leave the employee with at least 4 weeks of accrued leave;
• each cash-out needs a separate written agreement; and
• the employee must be paid at least the full amount they'd have received for taking the leave — including loading where it applies.

Most awards add more. The Fair Work Ombudsman says that under most awards an employee can't cash out more than 2 weeks in any 12-month period, the agreement must state the amount of leave, the payment and the payment date, and if the employee is under 18 a parent or guardian must also sign. Not every award allows cashing out at all, so check yours. The employer must keep the agreement as an employee record.

An employer can't force or pressure an employee to cash out. Under section 344 of the Fair Work Act, exerting undue influence or pressure on an employee to make such an agreement is unlawful.

Annual leave when employment ends

When employment ends — by resignation, dismissal, redundancy or the end of a fixed term — section 90(2) requires the employer to pay out all untaken annual leave. The amount must be what the employee would have been paid had they taken the leave. The Fair Work Ombudsman stresses that this includes leave loading and other payments that would have applied, even if an award, agreement or contract says otherwise. The rate used is the rate at the time of termination.

Annual leave also accrues up to the last day, so the final accrual for the part-year must be added. The payout goes in the final pay with a payslip issued within one working day.

Tax and super on unused leave

The ATO taxes unused annual leave paid on termination under PAYG withholding Schedule 7:

• Normal termination (resignation, dismissal, end of contract): leave accrued after 17 August 1993 is taxed at marginal rates. A small amount of pre-18 August 1993 leave is still taxed at a flat 32%.
• Genuine redundancy, invalidity or an approved early retirement scheme: all unused annual leave and leave loading is withheld at 32%, whatever the accrual date.

Unused annual leave isn't an employment termination payment, so it doesn't use the tax-free redundancy limit. And according to the ATO, unused leave paid on termination is not ordinary time earnings (or qualifying earnings from 1 July 2026), so no super guarantee is payable on it. Our redundancy pay guide covers the full termination tax picture.

Annual leave key numbers (2026)

4 weeks

NES annual leave per year

s 87

5 weeks

Defined shiftworkers

s 87(1)(b)

17.5%

Typical award leave loading

Not in the NES

4 weeks

Must remain after a cash-out

ss 93–94

Worked examples in A$

These examples assume an hourly base rate of A$30.00 for an adult employee — substitute the rate from your award's pay guide or the current minimum wage.

1. Full-time annual accrual. Priya works 38 ordinary hours a week at a Melbourne retail store covered by the General Retail Industry Award. She accrues 38 × 4 = 152 hours a year, or 2.923 hours a week. After 18 months without taking leave she has 228 hours (six weeks).

2. Two weeks' leave with loading. Priya takes two weeks (76 hours). Base pay is 76 × A$30.00 = A$2,280.00. Loading at 17.5% is A$399.00, giving A$2,679.00 — unless the weekend penalties she'd have earned on her rostered shifts would be higher, in which case the retail award pays that instead. Super is 12% of A$2,679.00 = A$321.48, assuming the loading isn't for lost overtime.

3. Part-timer's balance. Dan works 3 days of 7.6 hours (22.8 hours a week). His annual entitlement is 22.8 × 4 = 91.2 hours. If he takes a full week off, it uses 22.8 hours — a week of his ordinary hours, not a full-timer's 38.

4. Cash-out. Priya now has 7 weeks (266 hours) and her award allows cashing out. She can cash out up to 2 weeks (76 hours), leaving 5 weeks — more than the 4 weeks minimum. The payment must equal what she'd get for taking the leave: A$2,679.00 including loading, with a signed written agreement kept on file.

5. Payout on resignation. Priya resigns with 120 hours of untaken leave. Her final pay includes 120 × A$30.00 = A$3,600.00, plus loading of A$630.00 (because loading would have applied had she taken it), for A$4,230.00. PAYG is withheld at marginal rates under Schedule 7, and no super guarantee applies to the payout.

Common annual leave mistakes

• Accruing on overtime. Leave accrues on ordinary hours only. Accruing on all hours worked inflates balances and payouts.
• Paying leave at base rate when the award adds loading. Check the award clause; for retail, compare 17.5% against lost penalties.
• Forgetting loading in the final pay. The FWO says loading must be included if it would have applied, whatever the contract says.
• Treating public holidays during leave as leave days. A public holiday inside a leave block isn't deducted from the balance.
• Informal cash-outs. A verbal "just pay me out a week" breaches section 92. Use a written agreement each time, and stay within the award cap.
• Directing leave without a basis. Unless the award's shutdown or excessive-leave clause, or a reasonable s 94(5) direction, applies, you can't simply send an employee on leave.
• Paying super on the termination payout. Unused leave paid on termination isn't ordinary time earnings — don't over-report it.

Annual leave compliance checklist

0/8

• Correct entitlement set for each employee (4 weeks, or 5 for defined shiftworkers)
• Accrual based on ordinary hours, from day one, including paid leave periods
• Award leave loading clause checked and set up in payroll
• Leave requests answered promptly; any refusal reasonable and documented
• Public holidays inside leave not deducted from balances
• Cash-outs only with a written agreement, within award limits, leaving 4 weeks
• Leave balances available on request and shown on payslips (best practice)
• Final pay includes all untaken leave plus loading, taxed under Schedule 7

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Official links

• Annual leaveFair Work Ombudsman — entitlement and accrual
• Cashing out annual leaveFWO — rules and agreement template
• Payment for annual leaveFWO — loading and payout on termination
• PAYG Schedule 7ATO — tax on unused leave payouts
• Fair Work Act 2009NES annual leave — sections 86–94

What to do next

Check that your payroll accrues leave on ordinary hours only, that the leave loading clause from your award is set up, and that leave balances appear on payslips. If an employee is leaving, calculate untaken leave plus loading for the final pay; if the exit is a redundancy, read our redundancy pay guide for notice and severance; and for employees approaching seven to ten years of service, see long service leave, which is set by state and territory law.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

How much annual leave do you get in Australia?

Full-time and part-time employees get 4 weeks of paid annual leave for each year of service under the National Employment Standards, based on their ordinary hours. A full-time employee on 38 hours a week accrues 152 hours a year; a part-timer on 20 hours accrues 80 hours. Shiftworkers defined by their award or agreement get 5 weeks. Casual employees don't get paid annual leave.

Is annual leave loading compulsory in Australia?

Not under the National Employment Standards. Leave loading comes from modern awards, enterprise agreements or contracts. Most awards provide 17.5% — for example, the General Retail Industry Award pays the greater of 17.5% or the weekend penalties the employee would have earned. Award and agreement-free employees only get loading if their contract says so.

Can my employer refuse my annual leave request?

Yes, but only reasonably. Section 88 of the Fair Work Act says an employer must not unreasonably refuse a request to take paid annual leave. Refusal might be reasonable during a genuine peak period, if too many staff are already off, or if the request gives very short notice. Repeated refusals that leave an employee unable to take any leave are unlikely to be reasonable.

Do you get paid out annual leave when you resign or are fired?

Yes. Under section 90(2), any untaken annual leave must be paid out when employment ends for any reason — resignation, dismissal or redundancy. The payment must equal what the employee would have received had they taken the leave, including leave loading if it would have applied. Unused leave paid on termination isn't subject to the super guarantee.

Can you cash out annual leave in Australia?

Only if the employee's award or enterprise agreement allows it, or the employee is award and agreement-free. Each cash-out needs a separate written agreement, must leave at least 4 weeks of leave in the balance, and must pay the full amount the employee would have received for taking the leave. Most awards cap it at 2 weeks in any 12 months. An employer can't pressure anyone to cash out.

Does annual leave accrue while on sick leave or workers compensation?

Annual leave keeps accruing during paid leave, including paid annual leave, paid sick and carer's leave, paid family and domestic violence leave, community service leave and long service leave. It doesn't accrue during unpaid leave, such as unpaid parental leave or unpaid sick leave. Workers compensation absences depend on state or territory law, so check the relevant scheme.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 12 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Annual leave — Fair Work Ombudsman · accessed 12 October 2026
2. 2.Payment for annual leave — Fair Work Ombudsman · accessed 12 October 2026
3. 3.Cashing out annual leave — Fair Work Ombudsman · accessed 12 October 2026
4. 4.Taking annual leave — Fair Work Ombudsman · accessed 12 October 2026
5. 5.Fair Work Act 2009 — sections 87 to 94 (compilation of 7 July 2026) — Federal Register of Legislation · accessed 12 October 2026
6. 6.General Retail Industry Award 2020 [MA000004] — Fair Work Ombudsman / Fair Work Commission · accessed 12 October 2026
7. 7.PAYG withholding Schedule 7 — tax table for unused leave payments on termination of employment — Australian Taxation Office · accessed 12 October 2026
8. 8.List of payments that are ordinary time earnings — Australian Taxation Office · accessed 12 October 2026