Understanding carryover leave
In Australia, leave entitlements don't reset at year-end - they carry forward indefinitely. This differs from some countries where "use it or lose it" policies mean employees must take their leave within a set period or forfeit it. Australian law protects employees' right to accumulate leave.
Australian system
- Automatic carryover
- No expiry date
- Cannot be forfeited
- Accumulates indefinitely
Other countries
- May have "use or lose"
- Limited carryover period
- Carryover caps common
- Expiry after 1-2 years
What leave carries over
Different types of leave have different carryover and payout rules:
Leave carryover rules
Managing carryover balances
- Monitor regularly: Track leave balances throughout the year
- Encourage use: Promote taking leave for wellbeing
- Plan coverage: Ensure business can handle absences
- Address excessive: Use award provisions for high balances
Financial liability
Large carryover balances represent a significant financial liability - when the employee leaves, all accrued annual leave must be paid out at their current rate of pay. Encouraging regular leave use helps manage this liability.
Leave on termination
Must be paid out
- All accrued annual leave
- Leave loading (if applicable)
- Long service leave (varies by state)
- At current pay rate
Not paid out
- Personal/carer's leave
- Unused compassionate leave
- Community service leave
- Unless contract specifies
Common carryover mistakes
Implementing "use it or lose it"
Australian employers cannot forfeit employees' accrued annual leave. Policies that remove unused leave at year-end are unlawful.
Not tracking cumulative balances
Leave balances accumulate year after year. Employers must maintain accurate records of total accrued leave, not just current year entitlements.
Ignoring high balances
High carryover balances create financial liability and may indicate employee burnout. Address excessive leave proactively using award provisions.
Key takeaways
Leave carryover is automatic and permanent in Australia - employees have strong protections against forfeiting their accrued entitlements. Employers should focus on encouraging regular leave use rather than trying to limit carryover.
RosterElf's leave management automatically tracks leave balances as they carry over, giving you clear visibility into your team's cumulative entitlements.
