Guide
Is annual leave loading compulsory? Leave loading in QLD and NSW
Updated
This is the question the internet answers badly. There is no national law giving every Australian employee 17.5% leave loading.
Talk to a specialist Set your own loading percentage and see what the leave period is worth.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- Leave loading is not a universal statutory entitlement. The Fair Work Ombudsman states that annual leave loading is an additional amount paid to some employees when they take annual leave. It does not apply to all employees, and depends on what their award or enterprise agreement says (Fair Work Ombudsman: payment for annual leave).
- The Fair Work Ombudsman's library article says the annual leave loading amount and what it is calculated on varies based on the individual award or agreement. Its examples are not a full list of every way loading is calculated.
- Source: Fair Work Ombudsman library: annual leave loading in awards and agreements. That is why the percentage is a field rather than a fixed 17.5%.
- Many awards require a comparison rather than a flat payment. In the library article's Retail Award example, non-shiftworkers get the higher of two amounts. One is a 17.5% loading calculated on the employee's minimum hourly rate; the other is the weekend or shift penalty rates they normally get. The penalty field here models that comparison.
- Whether loading is calculated on an above-award rate or on the award minimum depends on the wording of the clause. The library article gives both patterns, so check yours before assuming the higher base.
- Annual leave itself is paid at the employee's current base pay rate for all hours of leave taken. That does not include overtime rates, penalties, allowances or bonuses (Fair Work Ombudsman). The loading sits on top of that base.
- Loading may not apply at all in three cases, all covered by the library article. It may be absorbed into an annualised wage arrangement permitted by the award or agreement, varied by an individual flexibility arrangement, or offset under a contractual arrangement.
- Superannuation generally applies. The ATO states that annual leave loading is included in ordinary time earnings unless it is clearly linked to lost overtime. Excluding it needs written evidence, such as the award, the agreement, or a documented policy stating the reason for the entitlement (ATO).
- Figures are gross. PAYG withholding on leave loading is a separate question and depends on how and when it is paid, so ask your payroll team rather than assuming a rate.
Where the entitlement actually comes from
The Fair Work Ombudsman puts it plainly: annual leave loading is an additional amount that is paid to some employees when they take annual leave. It does not apply to all employees and depends on what their award or enterprise agreement says (Fair Work Ombudsman: payment for annual leave).
The same page states that awards and enterprise agreements can set out a different method of payment for annual leave, and that annual leave loading is paid for annual leave. In other words the instrument creates the entitlement. The National Employment Standards give you the four weeks of annual leave; they do not give you a loading on top.
So where does 17.5% come from?
It is the figure that appears again and again inside awards, and the Fair Work Ombudsman's library article quotes it from several. The article opens by saying many awards and enterprise agreements can include terms giving employees an additional payment when they take annual leave.
It adds that the annual leave loading amount and what it is calculated on varies based on the individual award or agreement. Source: Fair Work Ombudsman library: annual leave loading in awards and agreements.
| Award | How the loading works | Source |
|---|---|---|
| Retail Award | Non-shiftworkers get the higher of a 17.5% loading calculated on the employee's minimum hourly rate, or the weekend or shift penalty rates they normally get | Fair Work Ombudsman library article K600323 |
| Security Award | The higher of what the employee would have earned for those ordinary hours had they not been on leave, or the minimum hourly rate plus applicable first aid, supervision or relieving officer allowances plus a 17.5% loading | Fair Work Ombudsman library article K600323 |
| Road Transport Award | Shiftworkers get the higher of 17.5% or the shift loading including relevant weekend penalty rates; day workers get the higher of 17.5% or the relevant weekend penalty rates | Fair Work Ombudsman library article K600323 |
| Hospitality Award | The employer must pay a loading of 17.5% on the amount payable under the National Employment Standards for a period of paid annual leave | Fair Work Ombudsman library article K600323 |
| Storage and Wholesale Award | A shiftworker gets the higher of 17.5% of the minimum pay rate or the shift loading normally received | Fair Work Ombudsman, payment for annual leave |
The Fair Work Ombudsman's own worked example makes this concrete. Alex is a full-time warehouse worker on five afternoon shifts a week under the Storage and Wholesale Award. He gets the higher of 17.5% of his minimum pay rate or his usual shift loading. His afternoon shift loading is 15%, so he gets base rate plus 17.5%.
Annual leave loading in NSW and Queensland
The state you work in does not change the answer for most employees. Modern awards apply nationally under the Fair Work system, so a retail worker in Brisbane and one in Sydney read the same annual leave clause.
The Fair Work Ombudsman lists the exceptions: state public sector and local government employees in New South Wales and Queensland, who stay under their state system. Source: Fair Work Ombudsman: the Fair Work system, read 30 October 2026. For them the loading comes from the state award or agreement, just as dependent on its wording.
When loading stops applying
The library article lists three situations in which employees may not receive the loading in their award or agreement, because it has already been accounted for.
- Annualised wage arrangements
- Some awards and agreements contain rules allowing an annualised wage to include entitlements such as annual leave loading.
- Individual flexibility arrangements
- All awards must include an IFA clause, and an IFA can be used to vary the effect of certain clauses, which may include annual leave loading.
- Contractual offsetting
- Some employers rely on a contract or separate arrangement to offset above-award pay against entitlements such as loading. The Fair Work Ombudsman advises employers to seek independent advice before doing this and says it cannot advise on specific contractual arrangements.
How to check your own position
- Identify which modern award or enterprise agreement covers your role. The Fair Work Ombudsman's find my award tool does this.
- Read the annual leave clause, not a summary of it. Look for a loading percentage and for the words higher of.
- Check what the loading is calculated on: the award minimum rate, or the amount you would have received had you not been on leave.
- Check whether an annualised wage arrangement, individual flexibility arrangement or contract clause already accounts for it.
- Only then put a number in a calculator.
If you are not covered by an award or a registered agreement, your leave loading is whatever your contract gives you, which may be nothing. That is a lawful outcome, not an underpayment.