All full time and part time employees are entitled to annual leave. This means that your employee can take time off and still receive their wage. However, in certain circumstances employees can receive an additional amount on top of their salary, called annual leave loading.
In this guide, we’ll tell you what leave loading is and when it applies.
Annual leave
Annual leave accrues on a pro-rata basis, and so you will be eligible to receive half your yearly leave entitlements if you work for six months. You are eligible for annual leave if you are a full-time or part-time worker in Australia.
Some Enterprise Agreements or Modern Awards provide annual leave for more than four weeks. You can calculate how much annual leave you have accrued on the Fair Work Ombudsman website.
Leave loading
This is an additional payment on top of your base rate of pay. This extra payment is usually 17.5% of your ordinary rate of pay. However, this percentage can vary based on your enterprise agreement, award or employment contract. This payment aims to offset employees for any bonuses or overtime they might miss while on holidays.
Eligibility
All full-time and part-time employees are eligible for this entitlement. However, this is not an automatic entitlement. If your contract or enterprise award doesn’t cover this benefit, then you will be paid at your ordinary base pay. Leave loading is only payable for annual leave and doesn’t apply for other types like personal or sick leave.
If you are eligible, you will receive this amount at the same time as your annual leave pay.
Receiving leave loading upon termination
This issue was contentious until the case of Stephen Edward Ryan v Whitehaven Coal Mining Pty Ltd. Here, the Court ruled that the full amount payable for unused annual leave must include leave loading.
Facts of the case
The employee resigned from Whitehaven Mining after three years of service. His enterprise agreement granted him a leave loading percentage of 20%. The employee received money for his untaken annual leave but without the loading payment. The employer argued that the employee was only eligible had he taken his annual leave during his period of employment. The Court ruled in favour of the employee, and he received the whole amount, including the 20% leave loading.
It is important to understand that this benefit does to extend to all employees. Generally, you can find this benefit within the terms of your employment contract. If you are unsure about your entitlement or the percentage you are entitled to, contact an employment lawyer for advice.
