Leave loading is an additional payment Australian employers make on top of an employee’s normal pay when they take annual leave. The standard rate is 17.5%, though some Modern Awards and enterprise agreements set different rates or cap the loading. It exists to compensate employees for the loss of overtime or shift-loadings they would otherwise have earned while working.

This guide covers how to calculate leave loading, who qualifies, and how to handle the common variations.

Key Takeaways

  • Leave loading is typically 17.5% of the employee’s base rate of pay, paid during annual leave.
  • It applies when the employee takes annual leave under the National Employment Standards (NES) or their Modern Award.
  • Not all employees receive leave loading — it depends on the applicable Modern Award or enterprise agreement.
  • Leave loading is paid on the base rate of pay, not including overtime, bonuses, or commissions.
  • Some Awards cap leave loading at a fixed dollar amount or limit it to certain leave types.

Step 1: Check whether leave loading applies

Leave loading is not a universal NES entitlement. It is typically included in Modern Awards or enterprise agreements. Check whether:

  1. The employee is covered by a Modern Award that includes leave loading.
  2. The enterprise agreement specifies a leave loading provision.
  3. The employment contract explicitly provides for leave loading.

If none of these apply, the employee is not entitled to leave loading unless it has been established as a custom and practice.

Awards that commonly include leave loading

Most Awards in the Clerks — Private Sector Award, Manufacturing and Associated Industries and Occupations Award, and Storage Services and Wholesale Award include the 17.5% loading on annual leave. Hospitality and retail Awards sometimes include different rates.

Step 2: Identify the base rate of pay

Leave loading is calculated on the employee’s base hourly rate — the ordinary rate of pay without overtime, shift-loadings, penalties, or allowances.

Formula:

Base hourly rate = Annual salary ÷ (52 × ordinary weekly hours)

Example: Employee earns $70,000 per year and works 38 ordinary hours per week.

  • $70,000 ÷ (52 × 38) = $35.48 per hour

The base rate for leave loading purposes is $35.48 per hour.

Step 3: Apply the 17.5% loading

Leave loading = Base hourly rate × 17.5%

Using the example above:

  • $35.48 × 0.175 = $6.21 per hour in leave loading

For the full 38-hour leave period:

  • $6.21 × 38 = $235.98 additional leave loading for the week

Step 4: Calculate the total leave payment

The employee’s total payment during annual leave is:

Total leave pay = Base hourly rate × hours of leave + Leave loading

For one week of annual leave:

  • Base pay: $35.48 × 38 = $1,348.24
  • Leave loading: $235.98
  • Total: $1,584.22

Step 5: Handle variations

Capped leave loading

Some Awards cap leave loading at a fixed weekly or daily amount. Check the applicable Award for specific caps.

Leave loading on other leave types

Some Awards extend loading to personal/carer’s leave or other leave types. The NES does not require it, but the Award or agreement may.

Casual and part-time employees

Casual employees do not receive leave loading — they receive the casual loading (typically 25%) instead. Part-time employees receive leave loading on their ordinary hours when taking annual leave.

Long service leave

Some states have specific provisions for leave loading on long service leave. Check the applicable state legislation.

Common leave loading calculation errors

1. Including overtime in the base rate

Leave loading is calculated on the ordinary base rate only. Overtime, penalties, shift-loadings, and allowances are excluded.

2. Applying loading to personal leave

The NES does not require leave loading on personal/carer’s leave. Check the Award — some may include it, but it is not standard.

3. Missing the Award

Some employers assume the NES covers everything. Leave loading is an Award provision, not an NES entitlement, so you must check the applicable Award.

4. Forgetting to pay loading in the same pay cycle

Leave loading should be paid at the same time as the annual leave pay. Do not leave it to be reconciled separately.

Putting it into practice

Five checks cover most leave loading calculations:

  1. Check the applicable Modern Award or enterprise agreement to confirm whether leave loading applies.
  2. Identify the base hourly rate by dividing salary by (52 × ordinary weekly hours).
  3. Apply the loading rate (usually 17.5%) to the base rate for each hour of annual leave.
  4. Pay the leave loading in the same pay cycle as the annual leave pay.
  5. Track Award variations and cap amounts — these change with Fair Work Commission annual wage reviews.
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Frequently Asked Questions

What is leave loading in Australia?

Leave loading is an additional payment (typically 17.5%) made on top of an employee’s ordinary pay when they take annual leave. It compensates for the loss of overtime or shift-loadings they would have earned while working.

Is leave loading compulsory?

Leave loading is not an NES entitlement, but most Modern Awards and enterprise agreements include it. If an Award applies to the employee, leave loading is usually compulsory during annual leave.

How do you calculate leave loading?

Multiply the employee’s base hourly rate by the loading percentage (usually 17.5%). This gives the hourly leave loading amount, which is paid for each hour of annual leave taken.

Do casual employees get leave loading?

No. Casual employees receive a casual loading (typically 25%) in lieu of leave entitlements, so they do not receive leave loading.

Is leave loading paid on public holidays?

Leave loading applies to annual leave taken. If the employee is on annual leave and a public holiday falls during that period, they receive their normal leave pay for the public holiday — leave loading is typically not paid on public holidays as the employee is not working.

This article is general information, not legal advice.

Last updated: 26 July 2026.