Most modern awards say that employees get paid annual leave loading on top of their minimum hourly rate when they take annual leave.
A number of awards say that employees get paid the higher of:
- a 17.5% loading, or
- the weekend penalty rates the employee normally gets (plus shift loading if the employee is a shiftworker).
This comparison needs to be made over the whole period of leave, and not on a daily basis.
Katya works 5 hours each day from Tuesday to Saturday, which is a total of 25 hours each week. Her minimum hourly rate is $20 per hour. She also gets paid a 25% weekend penalty on Saturday. Her Saturday pay rate is $25 per hour.
Katya takes one week of annual leave. For this week she gets paid the higher of:
- her minimum weekly rate plus 17.5% leave loading, or
- her minimum weekly rate plus weekend penalties.
Minimum weekly pay without weekend penalties
25 hours x $20 = $500
Minimum weekly pay plus leave loading
$500 + 17.5% = $587.50
Minimum weekly pay plus weekend penalties
20 hours x $20 = $400
5 hours x $25 = $125
Katya’s minimum weekly pay plus leave loading is higher than her minimum weekly pay plus weekend penalties.
Katya gets paid $587.50 for her week of annual leave.
Annual leave loading on termination of employment
An employee’s accumulated annual leave is paid out when employment ends. The employee is entitled to the same annual leave pay on termination that they would have received if they took the period of leave.
This includes any applicable annual leave loading, penalty rates or shift loading. The annual leave loading is calculated in the same way on termination as during employment.
See Final pay for more information.
When Katya resigned from her job, she was owed 2 weeks’ annual leave.
The payment for her annual leave on termination included the 17.5% annual leave loading, because it was higher than the weekend penalties she would have received if she worked for the 2 weeks.