What is the statutory annual leave entitlement under the National Employment Standards (NES)?

Full-time employees accrue 4 weeks (152 hours) of paid annual leave per year. Qualifying shiftworkers accrue 5 weeks (190 hours).

What is 17.5% annual leave loading and why is it paid?

Leave loading adds an extra 17.5% bonus on top of ordinary base pay during recreation leave, compensating workers for the loss of overtime and penalty rates while on leave.

Is employer superannuation payable on unused annual leave payouts at termination?

No. Under ATO Ruling SGR 2009/2, Super Guarantee (12.0%) is NOT payable on unused annual leave paid out upon termination. Super is only payable when leave is taken during active employment.

How is annual leave tax withheld when paid out as a lump sum upon resignation?

Unused leave payouts are taxed as lump sum payments in your pay slip using marginal tax rates or statutory PAYG Schedule 5 tax withholding formulas.

Do casual employees accrue paid annual leave or leave loading?

No. Casual employees do not accrue paid annual leave. Instead, they receive a 25% casual loading on their base hourly rate in lieu of leave entitlements.

Leave & Pay11 min read•Updated: 7 August 2026

Fair Work Award Leave Loading: How 17.5% Annual Leave Pay Works

Comprehensive guide to annual leave accrual, National Employment Standards (NES), 17.5% annual leave loading, payout tax withholding, and superannuation entitlements.

Calcivo Workplace Rights Team

Fair Work Award & Payroll Consultants

ATO 2026-2027 Verified

Fair Work Award Leave Loading: How 17.5% Annual Leave Pay Works

Key Financial Takeaways

✓Full-time employees in Australia accrue 4 weeks (20 days / 152 hours) of paid annual leave per year under the National Employment Standards (NES).
✓Shiftworkers under qualifying awards accrue 5 weeks (25 days / 190 hours) of paid annual leave.
✓Annual leave loading adds an extra 17.5% bonus on top of ordinary base pay while taking recreation leave.
✓Unused annual leave MUST be paid out upon employment resignation or termination.
✓Superannuation Guarantee (12.0%) is payable when leave is taken during employment, but is NOT payable on unused leave cash-outs at termination.

On This Page

In Australia, workplace entitlements are governed by the National Employment Standards (NES) administered by the Fair Work Ombudsman. Under the NES, paid annual leave provides employees with financial security while taking time off work for rest and recreation.

This guide explains annual leave accrual mathematics, the statutory origins of 17.5% Annual Leave Loading, payout tax withholding rules, and superannuation obligations.

1. Statutory Annual Leave Accrual Rates

Annual leave accumulates progressively from an employee's first day of work based on ordinary hours worked:

Employment Category	Statutory Annual Accrual	Accrual Per Month	Accrual Per Fortnight
Full-Time Employee (38 hrs/wk)	4 Weeks (152 Hours)	12.67 Hours / Month	5.84 Hours / Fortnight
Shiftworker (Under Award Definition)	5 Weeks (190 Hours)	15.83 Hours / Month	7.30 Hours / Fortnight
Part-Time Employee	Pro-rata based on hours	Pro-rata (4 weeks equivalent)	Pro-rata
Casual Employee	0 Hours (Nil)	Replaced by 25% Casual Loading	Replaced by 25% Casual Loading

2. What is 17.5% Annual Leave Loading?

Annual Leave Loading is an additional payment (typically 17.5%) added to an employee's base salary rate when they take recreation leave.

Historical Origin & Purpose:

Leave loading was introduced into Australian industrial awards in the 1970s. Its primary legal purpose was to compensate workers for the loss of overtime pay, penalty rates, and performance bonuses they would have earned had they been working rather than on leave.

3. Leave Loading Calculation Formulas

Depending on your Modern Award or Enterprise Bargaining Agreement (EBA), leave loading is calculated as:

$\text{Total Gross Leave Pay} = \text{Base Weekly Salary} \times 1.175$

Example Calculation:

If an employee earns $1,600 gross per week ($42.10/hr) and takes 2 weeks (76 hours) of annual leave:

•
Base Annual Leave Pay: $1,600 × 2 weeks = $3,200
•
17.5% Leave Loading Bonus: $3,200 × 17.5% = $560
•
Total Gross Pay for 2 Weeks Leave: $3,760 Gross

4. Termination Payout Rules & Tax Withholding

When an employee resigns or their employment is terminated, all accrued, unused annual leave must be paid out in full.

ATO Tax & Super Rules on Termination Payouts:

•
PAYG Income Tax Withholding: Unused leave payouts are subject to PAYG tax withholding based on marginal tax rate schedules.
•
Super Guarantee (12.0%): Under ATO Ruling SGR 2009/2, employer superannuation is NOT payable on unused annual leave paid out upon termination. Super is only payable when leave is taken as time off during active employment.

5. Calculate Your Accrued Leave & Loading Payout

Determine your total accrued leave hours, dollar value, 17.5% loading entitlement, and estimated tax withholding using Calcivo’s Annual Leave Calculator.