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Annual Leave Payout Calculator — How Much Will You Get? (2026)

|2 min read

Calculate how much your accrued annual leave is worth when you leave a job. Covers payout formula, leave loading, tax treatment on resignation vs redundancy.

MC

Leave & Entitlements Specialist · JD, Monash University — Admitted in Victoria (non-practising)

How annual leave payout is calculated

When your employment ends, all accrued but untaken annual leave must be paid out. The formula is: Leave payout = Accrued leave hours x Base hourly rate. For a full-time employee on $80,000/year with 3 weeks (114 hours) accrued: Base hourly rate = $80,000 / (52 x 38) = $40.49.

Leave payout = 114 x $40.49 = $4,616. If your award provides for 17.5% annual leave loading, check whether it applies to leave paid on termination.

Some awards include it, others don't. For example, if loading applies: $4,616 x 1.175 = $5,424.

Tax treatment of annual leave payouts

So, the tax on your annual leave payout depends on why you're leaving. If you resign or are dismissed (not genuine redundancy): the entire leave payout is taxed at your marginal rate — the same as regular salary income. If you are made genuinely redundant: accrued leave is taxed at a maximum of 32% (including Medicare levy).

This concessional rate may be lower than your marginal rate. Leave that accrued during the current financial year is taxed at marginal rates, while leave from prior years may attract the lower rate.

Unused long service leave on termination has different tax treatment again — generally taxed at a maximum of 32% regardless of the reason for leaving.

What counts as accrued leave?

Accrued annual leave includes all leave accumulated since your last anniversary or since leave was last taken. Annual leave accrues progressively at 2.923 hours per week for full-time employees (38 hours). Pro-rata accrual applies for part-time employees based on ordinary hours.

Leave accrues during paid leave (including annual leave, sick leave, and long service leave) but doesn't accrue during unpaid leave. Even if you've only been employed for a short period, all accrued leave must be paid out on termination.

There's no minimum service requirement for annual leave payout.

Have a workplace question?

Got a specific situation this article didn't cover? Ask our workplace advisor.

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General information and estimates only — not legal, financial or tax advice. Always check your specific award, agreement or contract, or a qualified professional, before you rely on the result.

MC
About Megan Cole

Former Fair Work Commission Associate (2021–2024) after two years as a plaintiff-side employment paralegal in Melbourne. Juris Doctor from Monash University (2020). Writes about unfair dismissal, leave entitlements, termination, and enterprise bargaining. Admitted in Victoria, currently non-practising. Based in Fitzroy North.

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