Understanding Annual Leave Entitlements for Employees

Relevant For:

Employers, HR professionals, and business owners managing employee leave entitlements.

Key Points:

  • All non-casual employees entitled to 4 weeks annual leave; certain shift workers may receive 5 weeks.
  • Casual employees receive loading in lieu of leave.
  • Leave accrues based on ordinary hours worked and accumulates year to year.
  • Employers should record leave accrual regularly.
  • Leave requests must not be unreasonably refused; reasonable directions for leave may apply.
  • Leave on public holidays is paid separately.
  • Annual leave can be cashed out under specific conditions.
  • Accrued leave must be paid out upon termination.
  • Proper management of leave avoids legal and financial risks.

Full Article:

Annual leave is a crucial entitlement for employees, ensuring they can rest and recharge.

Annual leave entitlements are part of the National Employment Standards (NES), providing a safety net for employee rights.

Annual Leave Entitlements:

  • Standard Entitlement: All employees (excluding casuals) are entitled to 4 weeks of annual leave per year.
  • Shift Workers: Certain shift workers receive 5 weeks of annual leave per year. To qualify, they must work in enterprises with 24/7 shifts, regularly work these shifts, and often work on Sundays and public holidays.

Casual Employees:

Casuals do not receive annual leave as they are compensated with a casual loading that covers entitlements like annual and personal leave.

Accruing Annual Leave:

Annual leave accrues based on ordinary hours worked. For instance, a full-time employee working 38 hours per week accrues 2.92 hours of leave weekly. Part-time employees accrue leave proportionally.

Leave accumulates progressively and carries over year to year, even when taking paid leave, but does not accrue during unpaid leave.

Employers should ensure leave is accurately recorded, ideally on a monthly basis, unless otherwise specified by an award or agreement.

Taking Annual Leave:

Employees can take annual leave with employer approval, and requests should not be unreasonably refused.

There is no set minimum or maximum leave period that must be taken at once.

Employers may direct leave during shutdowns or if leave balances are excessive, but such directions must be reasonable.

Leave taken on public holidays should be paid as public holiday pay, not deducted from annual leave balances.

Paying Annual Leave:

During leave, employees must be paid at their base rate of pay for their ordinary hours, excluding any bonuses, loadings, or allowances unless otherwise specified by an award.

Cashing Out Annual Leave:

Annual leave can be cashed out if allowed by an award or agreement, but employees must retain at least 4 weeks of leave.

Each cash-out agreement must be in writing, and undue pressure on employees is prohibited.

Termination and Transfer of Employment:

Upon termination, any accrued but untaken leave must be paid out, including any leave loading if applicable.

In a transfer of employment, leave balances are usually transferred unless the new employer decides otherwise, in which case the old employer pays out the accrued leave.


Correctly managing annual leave entitlements is essential to avoid underpayment claims, which can be made up to six years after an underpayment occurs. Employers must ensure compliance with the NES and any relevant awards or agreements to avoid breaches and potential penalties.