Annual leave is a paid leave entitlement under the NES providing full-time and part-time employees with four weeks of paid leave per year of service in Australia.
Legislation: Fair Work Act 2009 s87-94 | Category: Leave Entitlements
What is Annual Leave?
Annual leave is a paid leave entitlement under the National Employment Standards (NES) that provides full-time and part-time employees with four weeks of paid leave per year of service. Shift workers covered by certain awards or agreements may be entitled to five weeks.
Annual leave accrues progressively throughout the year based on ordinary hours worked and accumulates from year to year. Employees are entitled to be paid at their base rate of pay for annual leave, though some awards and agreements provide for annual leave loading (typically 17.5%).
Key Compliance Points for Employers
- Annual leave cannot be cashed out unless permitted by an award or agreement, and even then, employees must retain at least 4 weeks accrued
- Employers can direct employees to take excessive annual leave (typically more than 8 weeks accrued) with reasonable notice
- Unused annual leave must be paid out on termination at the employee’s current base rate
- Public holidays falling during annual leave do not count as annual leave days
- Employers must keep records of annual leave accrual and usage for 7 years
Frequently Asked Questions
Can an employer refuse annual leave?
Yes, employers can refuse annual leave requests if they have reasonable business grounds. However, they cannot unreasonably refuse leave, and employees with excessive accrued leave may have stronger rights to take leave.
Does annual leave expire?
No, annual leave accumulates from year to year and does not expire. Unused leave carries over indefinitely until taken or paid out on termination.
Is annual leave paid out on termination?
Yes, all unused annual leave must be paid out when employment ends, regardless of the reason for termination, at the employee’s current base rate of pay.
