The National Employment Standards set a floor, but modern awards set the real rules most Australian employers live under. With 122 modern awards in operation, each layering its own leave loading, shiftworker definitions, and cashing-out provisions on top of the NES, understanding which award applies — and what it actually requires — is the difference between compliant payroll and six-figure underpayment claims.
This guide covers Australian modern award leave entitlements in 2026: the NES baseline every award builds on, the leave types awards add or modify, leave loading calculations, and the compliance traps that catch employers across every industry.
Key takeaways
- The National Employment Standards (NES) set the minimum: 4 weeks annual leave, 10 days personal/carer’s leave, and 2 days compassionate leave for full-time employees.
- Most of Australia’s 122 modern awards add a 17.5% leave loading on annual leave, paid on the base rate of pay.
- Modern awards can provide more than the NES but never less — the NES is the statutory floor.
- Leave accrues progressively from day one and accumulates year to year — “use it or lose it” policies are unlawful.
- From 1 January 2025, intentional wage underpayment is a criminal offence carrying fines up to $1.65 million for individuals.
The NES baseline
Before looking at any modern award, the NES in the Fair Work Act 2009, Part 2-2 establishes the entitlements every employee receives regardless of award coverage. For full-time employees:
| Leave type | NES minimum |
|---|---|
| Annual leave | 4 weeks (152 hours on a 38-hour week) |
| Personal/carer’s leave | 10 days per year (76 hours) |
| Compassionate leave | 2 days per occasion |
| Family & domestic violence leave | 10 days per year |
| Community service leave | Unpaid (make-up pay for jury duty, first 10 days) |
| Parental leave | Up to 12 months unpaid (government PPL: 26 weeks from 1 July 2026) |
| Long service leave | State-based (see below) |
Part-time employees receive pro-rata entitlements. Casual employees receive the 25% casual loading in lieu of paid leave entitlements.
What modern awards add
Modern awards complement the NES by adding industry-specific provisions. The key areas where awards depart from — or expand on — the NES baseline:
Leave loading
The majority of modern awards require employers to pay 17.5% leave loading on top of the employee’s base rate when they take annual leave. This is calculated on the base rate only — overtime, bonuses, and allowances are excluded.
Awards that include leave loading include the General Retail Industry Award, the Hospitality Industry (General) Award, the Building and Construction General On-site Award, the Manufacturing and Associated Industries and Occupations Award, and the Health Professionals and Support Services Award.
Many awards use a “greater of” provision: the employee receives whichever is higher — 17.5% loading or the penalty rates they would have earned if working. For a night shift worker who would have earned 25% penalty rates, that 25% replaces the 17.5%.
Shiftworker definitions
The NES provides 4 weeks of annual leave. Modern awards that define “shiftworker” — an employee working rotating shifts across all days including weekends and public holidays — grant an additional week, totalling 5 weeks (190 hours). The exact definition varies by award, so checking the specific clause in your award is essential.
Cashing out annual leave
During employment, annual leave can only be cashed out if the applicable modern award or enterprise agreement permits it. Most awards that allow cashing out require:
- A separate written agreement for each cash-out
- The employee retains a minimum balance of 4 weeks
- Payment at least equal to the amount they would have received taking the leave
- A cap, typically 2 weeks per 12-month period
On termination, all accrued unused annual leave must be paid out — this is an NES requirement and cannot be contracted out of. Leave loading on termination varies by award.
Long service leave — state legislation
Long service leave sits outside the Fair Work Act and is governed by state and territory legislation. Entitlements vary significantly:
| State | Qualification period | Entitlement |
|---|---|---|
| NSW | 10 years | 2 months (8.67 weeks); 1 month per subsequent 5 years |
| Victoria | 7 years | 8.67 weeks; 4.33 weeks per subsequent 5 years |
| Queensland | 10 years | 8.67 weeks; 4.33 weeks per subsequent 5 years |
| South Australia | 10 years | 13 weeks (most generous) |
| Western Australia | 10 years | 8.67 weeks per 10-year period |
| Tasmania | 10 years | 8.67 weeks; 4.33 weeks per subsequent 5 years |
Pro-rata long service leave is generally available after 7 years in most states if employment ends for reasons other than serious misconduct.
Personal/carer’s leave under awards
The NES grants 10 days of paid personal/carer’s leave per year for full-time employees, accruing progressively and accumulating year to year with no cap. Part-time employees receive a pro-rata amount based on ordinary hours.
Some modern awards provide additional personal/carer’s leave above the NES minimum or have specific evidence requirements. The NES allows employers to request evidence — a medical certificate or statutory declaration — but demanding certificates for every minor absence may breach workplace laws. Employees must notify their employer as soon as practicable.
Casual employees receive 2 days unpaid carer’s leave per occasion and 2 days paid compassionate leave per occasion.
Common compliance traps
1. Leave loading calculation errors
Calculating leave loading on gross pay rather than the base rate, or forgetting to pay it on termination when the award requires it, creates systemic underpayment across your entire workforce.
2. Incorrect award classification
Misclassifying employees into the wrong award or the wrong classification level within an award is the number one cause of systemic underpayment in Australia. With 122 awards, each with unique rules, the risk is significant.
3. “Use it or lose it” policies
Forcing employees to forfeit accrued leave is unlawful under the NES. Unused leave carries over indefinitely. Imposing a forfeiture policy creates back-pay liability across every affected employee.
4. Overtime in accrual calculations
Leave accrues on ordinary hours only. Including overtime hours in accrual calculations inflates balances and creates downstream payment errors.
5. Ignoring part-time pro-rata rules
Part-time employees receive pro-rata entitlements based on their ordinary hours. When hours change, leave balances must be recalculated. Failing to adjust creates either over- or under-accrual.
A worked example
Anika works 30 hours per week under the General Retail Industry Award, Level 4, earning $28.50/hour base rate.
- Annual leave accrual: 30 hours/week × 4 weeks = 120 hours per year
- Leave loading on one week: $28.50 × 30 hours = $855 base × 17.5% = $149.63 loading
- Total leave pay for one week: $855 + $149.63 = $1,004.63
- Personal/carer’s leave: 10 days × 6 hours (30/5) = 60 hours per year
- On termination: All 120 hours paid at base rate, plus leave loading if the award requires it
Tracking leave accrual, loading, and award-specific rules across 122 modern awards is exactly the kind of complexity that creates payroll risk. A leave management system built for Australian awards automates accrual calculations, applies the correct leave loading, and flags compliance gaps before they become underpayment claims.
Sources
- National Employment Standards — Fair Work Ombudsman
- Modern awards fact sheet — Fair Work
- Annual leave — Fair Work Ombudsman
- Sick and carer’s leave — Fair Work Ombudsman
- Criminalising wage underpayments — Fair Work
Last updated: 26 July 2026. This article is general guidance, not legal advice. Confirm current award provisions and NES minimums with the Fair Work Ombudsman or an employment lawyer for your specific situation.
Frequently asked questions
How many modern awards exist in Australia?
There are currently 122 modern awards in operation, each covering specific industries or occupations. The applicable award depends on the employee’s role and industry, not the employer’s preference.
Does every modern award include 17.5% leave loading?
No. While the majority do, some awards do not include leave loading, and some have different rates or “greater of” provisions comparing loading to penalty rates. Always check your specific award’s annual leave clause.
Can an employee lose their accrued leave?
No. Under the NES, unused annual leave accumulates year to year indefinitely. “Use it or lose it” policies are unlawful and create back-pay liability.
What happens to leave when an employee is terminated?
All accrued unused annual leave must be paid out on termination regardless of the reason. Leave loading must also be paid on termination if the applicable award or enterprise agreement requires it.
Do casual employees get paid leave?
No. Casual employees receive a 25% casual loading in lieu of paid leave entitlements. They are entitled to 2 days unpaid carer’s leave per occasion and 2 days paid compassionate leave per occasion.