Leave Loading 17.5% Explained: Who Gets It & How It's Calculated

Leave loading is an additional payment — typically 17.5% — paid on top of your base rate of pay when you take annual leave. The concept originated in the 1970s when many Australian workers relied on penalty rates, overtime, and shift loadings as a regular part of their income. When those workers took annual leave, they lost access to those additional payments and experienced a drop in income during their holiday.

Leave loading was introduced to compensate for this loss and encourage employees to actually take their leave rather than working through it. The standard rate of 17.5% was set as a rough average of the penalty rates and loadings workers would otherwise earn.

Today, leave loading is not a universal entitlement under the National Employment Standards — the NES only requires annual leave to be paid at the base rate of pay. Whether you receive leave loading depends on your modern award, enterprise agreement, or employment contract. Many awards include a leave loading clause, but some do not. If your award or agreement is silent on leave loading, you're not automatically entitled to it unless your employer has a policy or practice of paying it (more on this below).

Leave loading entitlement depends entirely on what is specified in your applicable modern award, enterprise agreement, or individual employment contract. Most modern awards that cover industries where shift work, penalty rates, or overtime are common include a leave loading provision. For example, the Clerks — Private Sector Award, the General Retail Industry Award, the Manufacturing and Associated Industries Award, and the Building and Construction General On-site Award all include leave loading at 17.5%.

However, some awards calculate leave loading differently — instead of a flat 17.5%, they may provide that the employee receives the greater of the 17.5% loading or the shift loadings and penalty rates they would have received had they worked during the leave period. This is common in awards covering shift workers.

If you're on an enterprise agreement, check the leave provisions — some agreements provide leave loading, others don't, and some provide a higher rate. Award-free employees are only entitled to leave loading if it's specified in their employment contract. Salaried employees on contracts that specify a total remuneration package often have leave loading built into the salary or explicitly excluded.

About the standard leave loading calculation is straightforward: 17.5% of your base rate of pay for the period of annual leave taken. For example, if your base weekly pay is $1,000 and you take one week of annual leave, your leave loading is $1,000 x 17.5% = $175. Your total pay for that week would be $1,175 (base pay plus loading).

For part-time employees, the calculation is based on their ordinary hours. If a part-time employee works 20 hours per week at $30 per hour, their base weekly pay is $600, and their leave loading for one week would be $600 x 17.5% = $105.

Some awards use an alternative calculation method where the employee receives the greater of 17.5% loading or the shift penalties and loadings they would have earned. For example, a night shift worker whose penalty rates for the week would have totalled 25% of base pay would receive the 25% rather than the 17.5% standard loading. In practice, payroll systems calculate leave loading automatically based on the applicable award. If you want to verify the calculation, use our Leave Entitlements Calculator to check your annual leave balance and our Take Home Pay Calculator to model the after-tax impact of leave loading on your pay (more on this below).

There are two common approaches to paying leave loading, and which one applies depends on your award, agreement, or employer's practice. The most common method is paying leave loading each time the employee takes annual leave — the loading is included in the pay for the leave period and appears on the payslip for that period. The second method is paying leave loading as an annual lump sum, usually in December or at the end of the financial year.

Some awards and agreements specifically permit the employer to choose between these methods, while others mandate one approach. If your employer pays leave loading as an annual lump sum, they should calculate it based on the total annual leave taken during the relevant period.

Some employers who pay leave loading annually calculate it based on the leave accrued rather than the leave taken — check your award or agreement for the correct method. If you're unsure when you should receive leave loading, ask your payroll department or check your most recent payslip from a period when you took annual leave. If leave loading isn't shown, it may be paid annually or it may not be part of your entitlement.

When your employment ends — whether by resignation, termination, redundancy, or any other reason — you are entitled to a payout of your accrued but untaken annual leave. Whether leave loading is included in that payout depends on your award, enterprise agreement, or contract. Most modern awards that provide leave loading require it to be paid on unused annual leave at termination.

For example, the Clerks — Private Sector Award states that leave loading is payable on termination. However, some awards and agreements exclude leave loading from termination payouts, or only include it if the employee was terminated by the employer (not if they resigned).

This is worth knowing. Check the specific wording of your award or agreement carefully. If your award or agreement is silent on leave loading at termination, the general position is that leave loading should be included if it would have been payable had the employee taken the leave during employment.

Enterprise agreements may have specific clauses — some explicitly state that leave loading is or isn't payable on termination.

If you believe leave loading has been omitted from your final pay, raise it with your employer in writing and reference the relevant clause in your award or agreement.

Use our Leave Entitlements Calculator to estimate your total leave payout including loading.