Annual Leave in Australia: Entitlements, Accrual, and Cashing Out

Annual Leave Entitlement Under the Fair Work Act

Full-time and part-time employees covered by the national system are entitled to 4 weeks of paid annual leave per year under the National Employment Standards (NES) in the Fair Work Act 2009. Leave accrues progressively throughout the year — you do not have to wait 12 months before accessing it.

Part-time employees accrue on a pro-rata basis. An employee working 3 days per week accrues 3/5 of 4 weeks (2.4 weeks per year).

Casual Employees

Casual employees are not entitled to annual leave under the NES. Their casual loading (typically 25%) compensates for this. If a casual is later found to have been a permanent employee in substance, back-pay of leave entitlements may be owed.

Accrual and Carry-Over

Annual leave carries over from year to year — there is no "use it or lose it" rule under the NES. Accrued leave that is not taken remains owing until it is taken or paid out on termination.

Employers can direct employees to take annual leave in some circumstances (e.g., during a shutdown) if reasonable notice is given.

Annual Leave Loading

Some modern awards and enterprise agreements provide an annual leave loading of 17.5% on top of ordinary pay while on annual leave. Not all employees are entitled to loading — check your award or agreement.

Cashing Out Annual Leave

Annual leave can be cashed out only if:

• Your modern award or enterprise agreement permits it
• You retain at least 4 weeks of accrued leave after the cash-out
• You make a genuine written agreement (not under pressure)

Annual Leave on Termination

When employment ends for any reason — including dismissal for serious misconduct — all accrued but untaken annual leave must be paid out at the ordinary time rate.

Key Points

• Full-time employees: 4 weeks' paid annual leave per year; part-time accrues pro-rata
• Casual employees have no annual leave entitlement under the NES
• Leave carries over indefinitely — it cannot expire
• Leave loading of 17.5% applies under some awards
• All accrued leave is paid out on termination, regardless of how employment ends