What is annual leave loading?

SHAY WARAKER
Some employees are entitled to leave loading when they take time off work. But what is leave loading, and are you eligible for it?

Every full-time employee in Australia is entitled to at least four weeks (20 business days) of paid annual leave per year they’ve worked, with part-time employees entitled to pro-rata paid leave. Shift workers may be entitled to more. The pay you are entitled to, however, may vary depending on whether you are eligible for leave loading.

 In this article, we cover:

What is annual leave loading?

Under Australian law, you’re entitled to be paid at your normal rate of pay during your holiday period – but some employees receive an additional loading percentage on top of their weekly wage, depending on their award, agreement or employer. This additional pay is known as leave loading. Unlike paid leave, leave loading is not an automatic entitlement under the National Employment Standards (NES) and the Fair Work Act 2009. 

How is leave loading calculated?

Leave loading is usually an extra 17.5% on top of an employee’s normal wage for the time period taken off, or the greater of weekend or shift penalty rates and the national standard, according to the Australian HR Institute. This payment is intended to compensate employees for expenses during annual leave. 

Who gets leave loading?

Leave loading is a legal entitlement in some industry awards. An award is a legal document setting out minimum rates of pay and employment conditions for a particular industry. According to Fair Work Australia, there are more than 100 different awards across Australia.

Some examples of industries with selected awards featuring leave loading include: building and construction, manufacturing, hospitality, hair and beauty and real estate.  The Fair Work Ombudsman website includes advice about which awards cover different jobs, and eligibility for leave loading entitlements. 

If your award, enterprise agreement or contract does not state that leave loading must be paid, check your employment contract to see if it is included, or speak with your employer for more details. Generally speaking, if your job is covered by an award or enterprise agreement that entitles you to leave loading, you won’t lose this entitlement simply by signing an employment contract.

How do I get leave loading?

If you’re eligible, you will usually receive your leave loading payment at the same time as your annual leave pay. This is usually received in your standard pay, whether this is paid by your employer  before, during or after your time away.

Superannuation is also payable on annual leave loading, unless the loading is linked to a lost opportunity to work overtime, based on a ruling by the Australian Taxation Office (ATO).

If you’re comparing Superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology that matches the age group you selected.

Do you get leave loading as a payout if you quit your job?

Annual leave loading that accumulates, and isn’t used, is paid out to eligible employees in their final pay if they resign or end their employment. The Fair Work Ombudsman has a pay calculator that you can use if you need to work out any money owed to you, such as leave entitlements, for a final pay payment.

If you are changing jobs, you might also be interested in finding out more about super changes planned in 2021. According to the Treasury, workers will automatically keep their super fund when they change jobs from 1 July 2021.

 

 

Cover image source: Rawpixel.com (shutterstock.com)

Original author Sam Bloom. It was reviewed by our Sub Editor Jacqueline Belesky before it was updated as part of our fact-checking process.

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