How annual leave accrues under the NES
Every full-time and part-time employee in Australia (other than casuals) accrues paid annual leave under the National Employment Standards (NES) in the Fair Work Act 2009 (Cth), s 87. The standard rate is 4 weeks a year, based on the employee’s ordinary hours, not a lump sum granted on an anniversary, but a running balance that builds up progressively with every week worked and carries over if it isn’t taken. A small group of employees classified as shiftworkers get 5 weeks instead; this only applies where an award or registered agreement defines the employee as a shiftworker, or the business runs a genuine 24/7 continuous roster meeting the further NES conditions. Most trades and local-service businesses on standard hours won’t meet that test, but it’s worth checking the applicable award before assuming the standard rate applies.
Because accrual is progressive, the balance owing at any point is simply the rate applied to however long the person has worked, less whatever leave they’ve already taken. That is the whole of the arithmetic above: years of continuous service, multiplied by the accrual rate, converted to hours at the person’s ordinary weekly hours, minus hours already taken.
Part-time work and pro-rata accrual
Part-time employees get the same 4 weeks a year as full-timers, just scaled to their actual ordinary hours rather than a flat weekly figure. Someone rostered three days a week accrues three-fifths of what a five-day employee does, worked out from ordinary hours actually rostered. Change someone’s hours partway through the year, more shifts in the run-up to Christmas, fewer over a quiet winter, and the accrual rate should shift with it from that pay period on, not retrospectively.
This is where hand-kept leave registers tend to go wrong. A spreadsheet built around one fixed weekly accrual rate quietly drifts once someone’s hours change three or four times in a year, and nobody notices until the final pay does the reconciling for them.
Annual leave loading, and when it actually applies
Loading is extra pay on top of the base rate while leave is taken, commonly 17.5%, meant to cover the overtime and penalty rates an employee might otherwise have picked up if they’d been at work instead of on leave. It isn’t a NES entitlement in its own right. It only applies where an award, enterprise agreement or contract actually provides for it, and the rate and method (sometimes it’s whichever is higher of loading or a roster-based average, not a flat percentage) varies by award. That’s worth checking before it’s promised to anyone, because a business that pays loading to one employee and not another purely by habit, rather than by award coverage, is creating its own underpayment risk.
Some businesses pay loading on every leave payment as a matter of policy, above and beyond what any award actually requires, because it’s simpler to administer one rule than to track which employees are covered. That’s a legitimate choice. It just needs to be a choice, not an assumption.
What counts as ordinary pay
Annual leave is paid at the employee’s base rate for their ordinary hours. It generally excludes overtime, most allowances and bonuses unless an award, enterprise agreement or contract says otherwise. Some awards also require an annual leave loading (commonly 17.5%) on top of the base rate while leave is taken; this calculator doesn’t add a loading because it isn’t universal, so check the applicable award through Fair Work’s award finder before quoting a final figure to an employee.
What this calculator doesn't try to do
A handful of things affect the real balance that this simple accrual model deliberately leaves out. A public holiday that falls during a period of leave is paid as a public holiday, not deducted from the leave balance. Fair Work is explicit that taking leave over Christmas and New Year, for instance, shouldn’t cost an employee the days the business is closed for a public holiday regardless. Purchased leave arrangements (trading salary for extra annual leave under an award or agreement that allows it) change the accrual rate for the employee who opts in, and this tool assumes the standard rate rather than a purchased-leave variation. And a period on workers’ compensation can affect whether annual leave keeps accruing, depending on the relevant state’s workers’ compensation legislation rather than the NES itself. That interaction sits outside Fair Work’s remit and this calculator’s scope alike.
Unpaid leave, parental leave and workers compensation
Annual leave doesn’t accrue during unpaid leave, unless an award or registered agreement says otherwise. The exception that trips people up is unpaid community service leave, which does count. Everything else, from unpaid parental leave to a stint of unpaid leave agreed informally with an employer, pauses the accrual clock rather than breaking it: continuous service carries on either side of the gap, but the weeks spent on unpaid leave itself don’t add to the balance. Fair Work’s unpaid leave page sets this out directly.
Parental leave follows a similar shape. As Fair Work’s guidance on leave during parental leave explains, paid leave types generally stop accruing once someone’s on unpaid parental leave, with two carve-outs: a keeping in touch day, and any period of paid annual leave taken during what would otherwise be unpaid parental leave. Workers’ compensation is messier again, because whether annual leave keeps accruing during a compensation period depends on the relevant state’s workers’ compensation legislation (WorkCover in Victoria, and its equivalents elsewhere) rather than the Fair Work Act itself. Anyone managing a claim should check with the state scheme directly instead of assuming the NES answer applies.
Shutdown periods, and directing someone to take leave
Plenty of trades and small businesses close over the Christmas and New Year period, and plenty of employees don’t have enough accrued leave to cover it. An employer can direct staff to take paid annual leave during a shutdown, but only where an award or registered agreement allows it, and most do have rules about how much notice is required and how the direction has to be reasonable. Fair Work’s shutdown guidance sets out the notice periods that typically apply. Someone without enough leave up their sleeve to cover the closure doesn’t automatically go unpaid either; unpaid leave for the shortfall is one option, but it has to be agreed, not imposed.
Excessive leave, and what an employer can do about it
A balance that keeps climbing for years isn’t doing the employee any favours either. Fair Work treats an accrued balance beyond a set threshold as excessive, and once it’s there, most awards let an employer direct the employee to take some of it, provided the employee still keeps a minimum balance in reserve and gets proper notice. The detail (the threshold, the notice period, how much has to stay banked) sits in the applicable award, so check Fair Work’s direction to take excess leave page before sending that letter. A large accrued balance is also a real liability sitting on the books, money the business owes whether or not it’s ever formally budgeted for.
Casual employees don’t accrue it, and why that matters
Casuals sit outside all of this. They don’t accrue annual leave under the NES at all, and that’s deliberate, not an oversight: casual loading, paid on top of the base hourly rate, is meant to compensate for the leave, notice and other entitlements a permanent employee gets instead. Pay a casual the flat rate with no loading and they’re both missing the leave entitlement and missing what’s supposed to replace it, which is exactly the kind of error that turns up in a Fair Work audit. And if someone’s working regular, predictable shifts week after week for the same employer, it’s worth checking whether they’re still genuinely casual under the current test, or whether casual conversion should already have happened.
Cashing out, and getting it wrong
Annual leave can only be cashed out while someone is still employed if an award or agreement allows it and the employee keeps at least four weeks’ balance in reserve. It can’t simply be paid out at will, and even where it’s allowed, the amount is capped: no more than two weeks in any 12-month period, and each cash-out needs its own separate written agreement rather than a standing arrangement signed once and forgotten. An employer can’t pressure or require anyone to agree to it, and Fair Work’s cashing out annual leave page has the exact conditions. On termination, any accrued but untaken leave must be paid out in full as part of the final pay, regardless of why employment ended. Getting this wrong (under-accruing during employment, or under-paying it out at the end) is one of the more common underpayment findings the Fair Work Ombudsman reports against small employers, and it tends to come from exactly the kind of manual, spreadsheet-based tracking that’s easy to lose track of once a business has more than a couple of staff.
If leave, timesheets and pay runs currently live in three different places, that gap is where the entitlement mistakes creep in. Delta Infotech builds the quoting, invoicing and admin systems that keep this kind of record in one place instead of a spreadsheet nobody remembers to update.