Leave Loading

Most employers know that permanent employees are entitled to annual leave and personal/carer’s leave in accordance with the National Employment Standards (NES). But did you know that under some modern awards and enterprise agreements employees are also entitled to an additional leave loading when they take their paid annual leave?

As a HR Assured client, you will have access to a complete Human Resource Information System (HRIS) which will assist you in managing tricky things like leave loading, as well as access to a team of experienced workplace relations consultants to talk you through your obligations if you are unsure. If you are unsure whether you have to pay your employees leave loading, contact HR Assured for a free consultation on 1300 345 875 or book online.

What is leave loading?

Under the NES, permanent employees are paid their ordinary base rate when taking paid annual leave. But under some modern awards and enterprise agreements, employees are also entitled to leave loading when taking annual leave.

Whether an employee is entitled to an additional leave loading and the rate of any leave loading that is applicable will vary depending on the particular modern award or enterprise agreement. But generally speaking, most awards and enterprise agreements that provide for a leave loading of either 17.5% of the employee’s ordinary base rate or the prescribed weekend penalty rates, whichever is greater but not both. In practice, this means that an employee is entitled to receive their base rate of pay + an additional 17.5% leave loading or their base rate of pay plus any applicable weekend penalty rates, whichever turns out to be more favourable to the employee.

Do salaried employees get leave loading?

In the absence of an applicable modern award or enterprise agreement that provides for leave loading, employees are only entitled to be paid their ordinary base rate when taking a period of paid annual leave.

But if a modern award or enterprise agreement applies to the particular role that the salaried employee performs, and that modern award or enterprise agreement provides for an entitlement to leave loading, then a salaried employee will be entitled to an additional leave loading in accordance with the applicable modern award or enterprise agreement.

Employers will often pay a salary to offset the obligation to pay leave loading, as well as various other entitlements such as penalty rates and overtime. But unless this expressly stated in a written contract of employment, it is easy difficult for an employer to refute a claim by an employee that he or she is entitled to their ordinary salary plus the prescribed leave loading in the applicable modern award or enterprise agreement.

Do I have to pay leave loading on accrued but untaken annual leave which is paid out when the employment ends?  

Yes, the NES provides that if, when the employment ends, the employee has a period of untaken paid annual leave, then the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.

The Federal Court in Centennial Northern Mining Services Pty Ltd v Construction, Forestry, Mining and Energy Union (No 2) [2015] FCA 136 confirmed that this means employers must pay any applicable leave loading on any untaken paid annual leave that is paid out when the employment ends.

Need help understanding your leave loading obligations?  

As a HR Assured client, you will have access to a complete Human Resource Information System (HRIS) which will assist you in managing tricky things like leave loading, as well as access to a team of experienced workplace relations consultants to talk you through your obligations if you are unsure. If you are unsure whether you have to pay your employees leave loading, contact HR Assured for a free consultation on 1300 345 875 or book online.