Annual Leave – All You Need To Know

With year’s end fast approaching, you’ll be looking to put in annual leave to spend more time with your family over the Christmas break.

Annual leave forms part of ten National Employment Standards (NES) which apply to all employees in Australia, covered by the national workplace relations system, regardless of the award, agreement or contract.

The NES lays out the base requirements to annual leave, when it can be taken, the pay rates and what happens with annual leave when there is a transfer of employment or termination.Below, we’ll look at some of the commonly asked questions surrounding annual leave and lay out some of the mistakes we encounter

Annual Leave Minimum Amount

All employees, except casual staff, are entitled to four weeks of annual leave per year. That said, the leave accrues over time and starts from the first day of employment. Annual leave continues to accumulate while the employee is on paid annual leave or paid personal/carer’s leave. However, it does not accrue on unpaid leave. Simple, right?

As for shift worker, they have a minimum entitlement to five weeks of annual leave.

When Can You Take Annual Leave?

It has to be agreed between employer & employee; however, an employer cannot unreasonably say no. So, as soon as it’s available one may request it.

What If You Have Left Over Leave?

You needn’t take all your leave every year. It will roll over to the next year. Although, be aware that where an employee has excessive leave an employer can request you take paid leave if they deem it necessary. Generally speaking, eight weeks ( or ten for shift workers) is seen as excessive.

Can Leave Be Taken In Advance Before It’s Been Accrued?

Some agreements allow employees to take their annual leave in advance once agreed in writing by their employer or manager.

Most awards or agreements that allow payment in advance also include an agreement that must be signed. The agreement states that if you take leave in advance and don’t accrue it all back before your employment ends, then the employer can deduct the amount still owing from the final paycheck.

What Happens To Annual Leave If Terminated?

If you have any annual leave left upon termination, it must be paid out as if you had taken the leave. This will include any entitlement to annual leave loading in the Award or agreement.

However, a common mistake is that employers overpay employees. It is critical to remember that annual leave or Long Service Leave on termination are not subject to the payment of superannuation.

Terminations can be a fraught time for all involved, so the following might come in useful;

  • Calculate leave entitlements on all ordinary time earnings in the final pay period
  • Deduct any paid leave hours taken during the final pay period from the balance
  • Determine the reason for the termination and tax as appropriate.

Still not sure of something? The Aurion Payroll team has decades of experience and have the answers to anything payroll and leave related. Don’t hesitate to get in touch with one of our experts should you wish to know more!