Under the National Employment Standards (NES) in the Fair Work Act 2009, most full-time and part-time employees in Australia accrue four weeks of paid annual leave per year of service. Shiftworkers may be entitled to a fifth week.

Statutory entitlement

Four weeks of paid annual leave for each year of service (pro-rated for part-time employees). Eligible shiftworkers accrue five weeks. Annual leave accrues progressively during the year and accumulates from year to year.

Eligibility

All full-time and part-time employees, including those on fixed-term contracts. Casual employees are not entitled to paid annual leave.

Employer obligations

  • Accrue annual leave progressively from the first day of employment based on ordinary hours of work.
  • Pay annual leave at the employee's base rate of pay for ordinary hours, plus any leave loading required by the relevant Modern Award or enterprise agreement (commonly 17.5%).
  • Pay out unused annual leave on termination at the employee's base rate of pay.
  • Only direct an employee to take annual leave where the relevant Award or agreement permits (for example, during a Christmas shutdown).

Employee rights

  • Right to accrue and accumulate annual leave year on year — it does not lapse.
  • Right to leave loading where applicable under an Award or agreement.
  • Right to cash out leave only by written agreement, where the Award or agreement allows, and provided at least four weeks remain accrued after the cash-out.

Common pitfalls

  • Forgetting to apply 17.5% leave loading where the Modern Award requires it.
  • Failing to pay out accrued leave on termination, including any applicable loading.
  • Directing employees to take leave during a shutdown without checking the Award rules introduced in May 2023, which generally require accrued leave or paid time off.
  • Treating long-tenured casuals as entitled to paid annual leave (they are not, although they may be eligible to convert to permanent employment).

How accrual works

Annual leave accrues based on ordinary hours of work. A standard full-time employee on a 38-hour week accrues approximately 2.923 hours of leave per week, totalling four weeks (152 hours) per year. Leave accrues during paid leave and continues across the year.

Shutdowns and directed leave

Many employers shut down operations over the Christmas-New Year period. Since May 2023, most Modern Awards require employers to give at least 28 days written notice of a shutdown and only direct employees to take paid annual leave (not unpaid leave) if they have accrued leave available.

Frequently asked questions

What is annual leave loading?

Leave loading is an additional payment, typically 17.5% on top of base wages, paid when an employee takes annual leave. It applies where required by the relevant Modern Award or enterprise agreement and reflects historical compensation for missed overtime.

Can casual employees take paid annual leave?

No. Casual employees receive a 25% casual loading in lieu of paid leave entitlements, including annual leave. Long-term regular casuals may be eligible to convert to permanent employment.

Sources

This page is provided for general guidance and does not constitute legal advice. Always check the cited primary source for current law before making employment decisions.