Summarise with AI
What leave loading is
Leave loading is an extra percentage — most often 17.5% — paid on top of ordinary pay when an employee takes annual leave. You will also see it called annual leave loading or holiday loading.
It exists for a historical reason that still explains its shape. Shift workers earning penalty rates lose that income while on leave, so loading was introduced to stop a week off being a pay cut. That is why it survives most strongly in awards covering shift-based industries, and why some awards pay the greater of 17.5% or the penalties the employee would otherwise have earned.
Who actually gets it
Leave loading is not a universal entitlement
There is no standalone right to leave loading in the National Employment Standards. Fair Work states plainly that it does not apply to all employees and depends on what their award or enterprise agreement says. Treating 17.5% as automatic is the most common error in both directions — paying it where no instrument requires it, and failing to pay it where one does.
- Award-covered employees: check the annual leave clause. Many awards provide 17.5%; some provide the greater of 17.5% or shift penalties; some provide nothing.
- Enterprise agreement: the agreement governs, and it may differ from the award it replaced.
- Award-free employees: only if the contract provides it.
- Casuals: generally not applicable, because casuals do not accrue paid annual leave — they receive casual loading instead.
How to calculate it
The flat case is simple arithmetic: ordinary pay for the leave period, plus 17.5% of it.
Worked example
- Employee takes one week of annual leave; ordinary weekly pay is $1,200.
- Loading at 17.5% = $210.
- Total paid for the week = $1,410.
The harder case is the greater of formulation. Where the award requires the higher of 17.5% or the shift penalties the employee would have earned, you have to compute both and pay whichever is larger — which means knowing what they were rostered to work. The annual leave loading calculator handles both.
On termination — the expensive one
When employment ends, unused annual leave must be paid out at the amount the employee would have received had they taken it. So if they would have received loading, the loading is part of the termination payment.
This is where loading is most often missed. The person has left, the leave was never taken, and the final-pay calculation treats the balance as a plain number of hours. Our guide to calculating final pay covers the full sequence.
Common mistakes
Assuming 17.5% applies to everyone
It comes from the award or agreement, not the NES. Check the instrument before you budget for it or omit it.
Forgetting it on termination
Unused leave is paid as though taken. If loading would have applied, it applies to the payout.
Paying flat 17.5% under a "greater of" clause
Where the award says the higher of loading or shift penalties, paying the flat figure underpays anyone whose penalties exceed it.
The fix
Record the loading rule per award in payroll once, and derive both leave payments and final pay from the same leave balance.
Key takeaways
- Leave loading is an extra amount on annual leave pay, commonly 17.5%.
- It is not in the National Employment Standards — it comes from the award, agreement or contract.
- Some awards require the greater of 17.5% or the shift penalties otherwise payable.
- Unused annual leave paid on termination includes loading where the employee would have received it.
- Casuals generally do not get it, because they do not accrue paid annual leave.
Work out a figure with the annual leave loading calculator, or check what your award requires in the award rate guides.
Leave loading is one of the entitlements most often missed on termination, because it has to be paid on unused leave too. RosterElf keeps leave balances against the employee so the final pay is calculated from a record rather than a reconstruction.
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