How to Calculate Annual Leave

Annual leave, sometimes known as holiday pay, is a minimum entitlement under the National Employment Standards that every employer must be familiar with. .

A full-time employee (who is not a shift worker) is entitled to 4 weeks of annual leave for each year of service. Part-time employees accrue annual leave on a pro rata basis.

Employees can take annual leave at any time if they have it accrued unless it is an unreasonable request.

So how do I calculate annual leave?

There are a number of calculators available to work out how much annual leave, annual leave loading and sick/carer’s leave an employee has accrued at a point in time. The entitlement for a full-time employee is 152 hours, which is equal to four weeks per year and is paid at the employee’s base rate of pay. Whilst this article is not intended to provide the calculations below we outline some of the fundamental principles on how annual leave accumulates.

  1. Annual leave, accrues based on an employee’s ordinary hours of work. Accrual begins when the employee commences with the business, even when the employee is in probation.
  2. Annual leave accumulates gradually during the year and will accumulate from year to year. It is in the employer’s best interest to ensure that annual leave is managed properly to prevent excessive leave accruals.
  3. Annual leave will continue to accrue while a person is on any form of paid leave including annual leave, personal leave, community service leave and long service leave. Annual leave however, will not accumulate when an employee is on unpaid annual leave, unpaid parental leave and unpaid sick/carer’s leave.

What is leave loading?

While most employers have an understanding on different forms of leave, many do not understand the concept of leave loading and whether their employees are entitled to it. Annual leave is paid at an employee’s base rate of pay however in some instances, an employee’s contract or applicable Modern Award or Enterprise agreement may entitle the employee to receive annual leave loading. For more information on annual leave loading please see our related post here.

Still don’t understand annual leave and leave loading? HR Assured are here to help, contact us today for an informal chat!