How Annual Leave Is Calculated

Annual leave accrual is calculated from your ordinary hours of work. Under the National Employment Standards, full time and part time employees accrue 4 weeks of annual leave a year, based on their ordinary hours. For a full time employee working 38 hours a week, that is 152 hours a year, or about 2.9231 hours for each week worked. Part time employees accrue the same entitlement pro rata, in line with the hours they work.

To calculate your balance from start date, hours and leave taken, use our annual leave calculator. For personal or carer’s leave, a separate entitlement, see our sick leave calculator.

The NES method

The National Employment Standards, or NES, set the minimum annual leave entitlement for employees covered by the Fair Work system. Leave accrues progressively through the year, based on ordinary hours of work. It does not arrive in one block on your anniversary, and it is not based on overtime.

Think of accrual as a running balance. Each week you work, a small amount is added. Each time you take leave, those hours are subtracted. Your payslip balance should reflect everything accrued minus everything taken.

For a 38 hour week, the maths is:

1. Annual entitlement: 38 hours multiplied by 4 weeks, which is 152 hours.
2. Weekly accrual: 152 divided by 52, which is about 2.9231 hours a week.
3. After 26 weeks: about 76 hours, or 2 weeks at that pattern.

For a full time employee on a 38 hour week, the balance builds like this:

In days, the entitlement depends on your day length. At 7.6 hours a day, a 38 hour week over 5 days, 152 hours is 20 days: another way of describing the same 4 weeks. If your day is longer or shorter, the days change but the hours and weeks do not. Working in hours avoids most confusion, which is why our calculator uses hours.

Accrual table for common patterns

Find your usual weekly ordinary hours. At 25 hours a week, you accrue about 1.9231 hours a week and 100 hours a year. That is still 4 weeks of leave for you, because your week is 25 hours. Pro rata does not mean fewer weeks. It means the same 4 weeks, measured in your own hours.

If your hours vary, accrual follows the ordinary hours actually worked in each period. For a manual check, apply the same proportion: leave accrues at 4 weeks for each 52 weeks of ordinary hours worked.

Part time and pro rata accrual

Part time employees get the same 4 weeks a year as full time employees, calculated pro rata. A half time employee on 19 hours a week accrues 76 hours a year, exactly 4 of their 19 hour weeks.

If your pattern changes, you keep the balance already accrued and accrue at the new rate from the change date. The existing balance is not recalculated down. When you take leave, it is paid and deducted based on your ordinary hours at the time you take it, under the rules applying to your employment.

Casual employees do not accrue annual leave under the NES, because casual loading is paid instead of leave entitlements. This guide applies to full time and part time employees, not casuals.

Shiftworkers and 5 weeks

Some shiftworkers get 5 weeks a year instead of 4. This applies to shiftworkers as defined under an award or enterprise agreement, not automatically to everyone who works shifts or unsocial hours.

If it applies to you, the same method is used with 5 weeks in place of 4. At 38 hours a week, that is 190 hours a year. Whether you meet the definition depends on your award or agreement, so check that document or ask payroll which entitlement they have recorded. Do not assume the higher entitlement applies just because your roster includes nights or weekends.

Leave loading

Leave loading is an extra payment, commonly 17.5 percent, paid on top of base pay when you take annual leave. It is not an NES entitlement. It comes from awards and enterprise agreements, which is why some employees receive it and others do not, and why our calculator treats it as an optional toggle.

If loading applies, work out base pay for the leave period, then add 17.5 percent. On base pay of $3,040, loading is $532, giving a gross amount of $3,572 before tax.

Check your award or agreement for whether loading applies, at what rate, and whether it is paid on leave taken, leave paid out, or both. Those details vary, and that document is the authority.

Accrual while on leave

In most cases, annual leave continues to accrue during paid leave, such as annual leave itself and paid personal leave. It generally does not accrue during unpaid leave, subject to a few exceptions in the Fair Work Act.

This matters for longer absences. A month of paid annual leave still adds accrual. A month of unpaid leave generally adds nothing, so your balance grows more slowly across a year that includes unpaid time.

Payout when employment ends

If your employment ends, your employer must pay out unused accrued annual leave at your base pay rate, based on your balance at your finish date.

Using our verified example, a balance of 76 hours at $40 an hour gives leave pay of $3,040. If loading applies to the payout under your award or agreement, loading at 17.5 percent adds $532, for a gross payout of $3,572. Whether loading is included depends on your award or agreement and, under some awards, on why the employment ended.

A payout is taxed as part of your income for the year. The marginal method estimates the tax by comparing tax on salary plus the payout with tax on salary alone. Your final position is settled in your tax return. Our annual leave calculator includes a payout view using that approach.

This guide is general information only, based on the NES rules in our sources. Awards and agreements can add higher entitlements for your job. For a dispute or complex roster, Fair Work Ombudsman guidance and your own award or agreement are the next step.