Annual Leave in Australia: The 4-Week NES Entitlement, Loading, and Cashing Out

Full-time and part-time employees in Australia accrue 4 weeks of paid annual leave a year under the National Employment Standards, 5 weeks for a genuine shiftworker, and casual employees do not accrue any paid annual leave at all.

This article covers annual leave under the National Employment Standards in the Fair Work Act 2009 (Cth), current as at August 2026. It does not cover the full detail of casual employment generally, covered on recordinglaw.com's casual employee rights guide, or long service leave, which is an entirely separate, state and territory-based scheme covered on the site's state long service leave guides.

The National Employment Standards Entitlement

Section 87 of the Fair Work Act gives most employees, other than casuals, 4 weeks of paid annual leave for each year of service. An employee gets 5 weeks instead of 4 if a modern award or enterprise agreement covering them describes them as a shiftworker for this purpose, or if they qualify under a narrower test that applies to employees who are not covered by any award or agreement.

That narrower, award and agreement-free test is a genuinely specific, three-part one, not a general rule for anyone who happens to work shifts. It requires that the employee works in an enterprise where shifts are continuously rostered 24 hours a day, 7 days a week, that the employee is regularly rostered to work those shifts, and that the employee regularly works Sundays and public holidays. In practice, most employees who get 5 weeks get it because their award or enterprise agreement labels them a shiftworker, which is a much more common route than qualifying under this standalone test.

How Leave Accrues

Annual leave accrues progressively during a year of service according to the employee's ordinary hours of work, rather than arriving as a single lump grant on an anniversary date, and it accumulates from year to year. If employment ends partway through a year, the employee has accrued leave only up to that point, calculated pro rata. Unlike some other leave regimes, the National Employment Standards do not impose any expiry or forfeiture on unused annual leave; it keeps accumulating indefinitely unless an award or agreement term, or a valid direction to take excess leave, changes that.

Leave is taken for a period agreed between the employer and the employee, and an employer must not unreasonably refuse to agree to a request. There is no blanket right for an employer to simply veto a leave request outright.

Payment for Annual Leave

Annual leave is paid at the employee's base rate of pay for their ordinary hours during the leave period. Base rate alone does not include overtime, penalty rates, allowances or bonuses, unless the applicable award or agreement builds one of those into the base rate itself or adds a separate leave loading, discussed below.

On termination, any untaken accrued annual leave must be paid out at the same rate that would have applied had the leave actually been taken, and the Fair Work Ombudsman's guidance is that this payout obligation applies even if an award, enterprise agreement or employment contract tries to say otherwise.

Cashing Out Annual Leave

Paid annual leave cannot be cashed out except in specific, tightly conditioned circumstances; there is no default right to cash out leave instead of taking it. For employees covered by a modern award or enterprise agreement, cashing out is only available where that award or agreement includes a cashing-out term, and not every award allows it. Where a term does exist, it must require that the employee's remaining accrued balance stays at least 4 weeks after each cash-out, that each cash-out of a particular amount is agreed separately in writing, and that the employee is paid at least the full amount they would have received had they taken the leave instead.

For an employee who is not covered by any award or enterprise agreement, cashing out instead requires a direct written agreement between the employer and employee that meets the same three conditions. The Fair Work Ombudsman's practical guidance adds that an employee generally cannot cash out more than 2 weeks of leave in any 12-month period, though this is reported as a common award term rather than a figure written into the Fair Work Act itself. An employer can never pressure or require an employee to cash out leave; it is always agreement-based.

Directing an Employee to Take Leave

Whether, and on what terms, an employer can direct an employee to take annual leave depends heavily on whether the employee is covered by an award or enterprise agreement. For award and agreement-free employees, the Fair Work Act itself is the direct source: an employer may require the employee to take leave only if the requirement is reasonable, with excessive accrued leave and an enterprise shutdown, such as a Christmas and New Year closure, given as the Act's own examples of what can be reasonable.

For employees covered by an award or enterprise agreement, the specific thresholds are set by that award or agreement, not by the National Employment Standards. The Fair Work Ombudsman reports that under many awards, an employer can direct an employee to take leave once they have accrued at least 8 weeks of leave, or 10 weeks for a shiftworker, generally with a written notice period of at least 8 weeks and not more than 12 months, a minimum 1-week period of leave, and a requirement that the direction not take the employee's remaining balance below 6 weeks. These specific figures are award-typical patterns the Fair Work Ombudsman reports as common, not National Employment Standards rules, so they should be checked against the applicable award rather than assumed. An employer also cannot direct an employee to take annual leave while the employee is already on sick or carer's leave.

Annual Leave Loading

Annual leave loading is a genuinely common source of confusion because a specific figure, 17.5 percent, circulates widely as though it were a universal entitlement. It is not. The Fair Work Act's annual leave provisions contain no mention of loading or any percentage figure at all. Leave loading exists only where an applicable award or enterprise agreement provides for it; awards and agreements can set out both a different method of payment for annual leave and whether leave loading applies. The 17.5 percent figure traces to specific award terms, such as a worked example in the Storage Services and Wholesale Award for a shiftworker, where the loading is the higher of 17.5 percent of the minimum pay rate or the employee's normal shift loading; it is a common award rate, not a default or NES-derived one.

The practical takeaway is to check the specific award, enterprise agreement or contract that applies, using the Fair Work Ombudsman's Pay and Conditions Tool if needed, rather than assuming any particular loading rate, including 17.5 percent, automatically applies. Where loading does apply during employment, it must also be included in any final termination payout for unused leave, as discussed above.

Casual Employees and Annual Leave

Casual employees are excluded from the National Employment Standards annual leave entitlement entirely; section 87 applies to employees other than casuals. Casuals do not get most types of paid leave, notice of termination or redundancy pay, even where they work regularly over a long period, and instead generally receive a casual loading built into their pay rate in lieu of these entitlements. Casuals do still get certain other entitlements, including unpaid carer's leave, unpaid compassionate leave and paid family and domestic violence leave, covered on recordinglaw.com's personal and carer's leave guide. In some states and territories, long-serving casuals can also become eligible for long service leave; check the relevant state or territory guide rather than assuming a national rule, since long service leave is a completely different scheme from annual leave. Annual leave is one of several minimum entitlements under the National Employment Standards; see recordinglaw.com's Australia employment law hub for the full set, including notice of termination and redundancy pay.

This article provides general legal information about the Fair Work Act 2009 (Cth) and Fair Work Ombudsman guidance, current as at August 2026. It is not legal advice and does not account for individual circumstances, including the terms of a specific award, enterprise agreement or employment contract, which can vary the details discussed here. For advice about a specific situation, consult a legal practitioner admitted in the relevant Australian state or territory.