How to calculate leave entitlements
Calculating leave entitlements correctly is essential for compliance with Australian employment law. Get it wrong and you risk underpaying employees, facing Fair Work claims, or damaging trust with your team.
Written by
Georgia Morgan
General information only – not legal advice
This guide provides general information about calculating leave entitlements under Australian employment law and the National Employment Standards (NES). Leave entitlements vary by modern award and enterprise agreement. It does not constitute legal, HR, or professional advice and should not be relied on as a substitute for advice specific to your business, workforce, or circumstances.
What are leave entitlements?
Leave entitlements are paid time off that employees earn while working. Under the National Employment Standards (NES), permanent employees in Australia are entitled to annual leave and personal/carer's leave (sick leave). These minimum entitlements apply to all employees covered by the national workplace relations system.
According to Fair Work Australia, full-time employees receive 4 weeks of annual leave per year and 10 days of sick/carer's leave per year. Part-time employees receive these entitlements on a pro-rata basis according to their ordinary hours of work.
Sample leave calculation sheet
Here's what a typical leave entitlement calculation looks like with the key formulas highlighted.
A typical leave calculation includes:
- Employment type — Full-time, part-time, or casual
- Ordinary hours — Regular weekly hours (not overtime)
- Annual leave — 4 weeks × ordinary hours
- Sick leave — 10 days per year (pro-rata)
- Leave loading — 17.5% if applicable by award
Leave entitlements by employment type
Different employment types have different leave entitlements under the NES.
Full-time
38 ordinary hours per week with full leave entitlements.
Leave loading: Check award (typically 17.5%)
Part-time
Regular hours less than full-time. Pro-rata entitlements apply.
Key: Use actual regular hours, not full-time hours
Casual
No guaranteed hours. Generally no paid leave entitlements.
Note: May be entitled to convert to permanent
Pro-rata calculations are essential
Part-time employees must receive leave entitlements in proportion to their hours. Don't just divide by 2 for someone working half time - calculate based on their actual regular weekly hours compared to a standard full-time week.
Leave calculation preparation checklist
Complete these items before calculating leave entitlements to ensure accuracy and compliance.
Employment type confirmed
EssentialFull-time, part-time, or casual classification verified
Award identified
EssentialRelevant modern award or enterprise agreement confirmed
Ordinary hours calculated
EssentialRegular weekly hours (excluding overtime) determined
Annual leave formula applied
Essential4 weeks × ordinary hours per week calculated
Sick leave calculated
Essential10 days per year pro-rated for part-time staff
Leave loading checked
Award provisions for leave loading (typically 17.5%) reviewed
Accrual method set
EssentialProgressive accrual system implemented
Record-keeping system
EssentialSystem in place to track and store leave records for 7+ years
Payslip details
EssentialLeave balances displayed on employee payslips
Annual audit scheduled
Regular review process for leave calculation accuracy
Three ways to calculate leave entitlements
Each method has trade-offs. Here's how they compare.
Manual calculation
Calculator or pen and paper. Works but is time-consuming and error-prone.
Best for: Single calculations only
Free online calculators from Fair Work. More accurate but still requires manual input.
Best for: One-off verifications
Automated accrual tracking, award compliance, and payroll integration. Professional and accurate.
Best for: Any business with employees
How to calculate leave entitlements
Follow these steps to calculate accurate leave entitlements for your employees.
Determine employment type
Identify whether the employee is full-time, part-time, or casual to understand which leave entitlements apply.
Key actions:
- Full-time employees work 38 hours per week and receive all leave entitlements
- Part-time employees work regular hours less than full-time and receive pro-rata entitlements
- Casual employees typically do not receive paid leave but receive casual loading instead
- Check the employment contract and applicable award or enterprise agreement
Check the applicable award or agreement
Review the relevant modern award or enterprise agreement to confirm specific leave entitlements for the role.
Key actions:
- Visit Fair Work Ombudsman website to find the applicable modern award
- Some awards provide more generous leave entitlements than the NES minimum
- Enterprise agreements may override award conditions with better terms
- Check for industry-specific provisions like additional leave days
Calculate annual leave accrual
Work out how much annual leave the employee accrues based on their working hours and employment type.
Key actions:
- Full-time (38 hours/week): 4 weeks × 38 hours = 152 hours per year
- Weekly accrual for full-time: 152 hours ÷ 52 weeks = ~2.923 hours/week
- Part-time: Calculate pro-rata based on their regular weekly hours
- Example: 20 hours/week = 4 weeks × 20 hours = 80 hours per year
Calculate sick and carer's leave
Determine personal/carer's leave entitlements, which accrue separately from annual leave.
Key actions:
- Full-time employees: 10 days (76 hours for 38-hour week) per year
- Part-time employees: Pro-rata based on ordinary hours worked
- Accrues progressively throughout the year as the employee works
- Unused personal leave carries over to the next year
Apply leave loading if applicable
Check if the employee is entitled to annual leave loading and calculate the additional payment.
Key actions:
- Leave loading is typically 17.5% of the ordinary rate of pay
- Not all employees are entitled to leave loading - check the award
- Some awards cap leave loading at a maximum dollar amount
- Leave loading is paid when annual leave is taken, not when it accrues
Track and record accruals
Maintain accurate records of leave balances and provide regular statements to employees.
Key actions:
- Update leave balances every pay period as leave accrues
- Record when leave is taken and deduct from the balance
- Provide payslips showing current leave balances
- Keep records for at least 7 years as required by Fair Work
Leave calculation tips
Follow these principles for accurate, compliant leave calculations.
Use official calculators
Fair Work provides free PACT tools to ensure accurate calculations that comply with NES.
Check awards regularly
Modern awards are updated periodically. Stay current with changes to entitlements.
Automate where possible
Reduce errors by using software that automatically calculates and tracks accruals.
Provide clear statements
Include current leave balances on every payslip so employees always know their entitlements.
Keep detailed records
Maintain accurate records of all leave accruals and taken for at least 7 years.
Review annually
Conduct yearly audits to ensure all calculations remain accurate and compliant.
Key formulas quick reference
Keep these formulas handy for quick calculations:
Calculate leave with RosterElf
What takes hours manually can be done automatically with the right leave management software.
Automatic accrual tracking
Leave accrues automatically based on hours worked and employment type. No manual calculations needed.
Award compliance built-in
Software applies the correct award rules for your industry, including leave loading and special provisions.
Real-time leave balances
Employees and managers can view current leave balances anytime, reducing queries and admin time.
Smooth payroll integration
Leave data flows directly to payroll, ensuring accurate payments including leave loading when applicable.
No credit card required
Feature comparison
See exactly how each leave calculation method stacks up across key features.
Calculation time
Accrual tracking
Award compliance
Leave balances
Error risk
Leave loading
Historical records
Payroll integration
| Feature | Manual | Fair Work PACT | Software |
|---|---|---|---|
| Calculation time | 30-60 minutes | 15-30 minutes | 5-10 minutes |
| Accrual tracking | Manual spreadsheet | Formula-based | Automatic calculation |
| Award compliance | Manual checking | Manual checking | Built-in award rules |
| Leave balances | Updated manually | Semi-automatic | Real-time updates |
| Error risk | High | Medium | Low |
| Leave loading | Manual calculation | Formula-based | Automatic |
| Historical records | Filing cabinet | Spreadsheet history | Complete audit trail |
| Payroll integration | Manual entry | Export/import | Direct integration |
Common leave calculation mistakes
Learn from others' errors. These mistakes lead to compliance issues and underpaid employees.
Confusing calendar weeks with working weeks
Consequence: Incorrect leave calculations leading to underpayment or overpayment of entitlements
Solution: Use the employee's regular working hours, not calendar time. Calculate based on actual hours worked per week and refer to award rates
Not calculating pro-rata for part-time employees
Consequence: Part-time staff receive incorrect entitlements, creating compliance issues and employee dissatisfaction
Solution: Always calculate part-time leave as a proportion of full-time entitlements based on their regular hours. Use leave management software
Forgetting to apply leave loading
Consequence: Underpayment of employee entitlements when annual leave is taken
Solution: Check the applicable award to confirm leave loading rates and apply the percentage (typically 17.5%) when leave is taken. Automate this with payroll integration
Not tracking casual hours correctly
Consequence: Casual employees may be owed leave entitlements if they work regular hours and should be reclassified
Solution: Monitor casual employee hours regularly. If they work predictable patterns, they may need to be offered permanent employment. Review payroll audit procedures
Including overtime in leave calculations
Consequence: Overstated leave accruals that don't comply with Fair Work requirements
Solution: Only ordinary hours count toward leave accrual, not overtime or penalty rates. Use automated systems to track ordinary vs overtime hours
Leave calculation resources
Access free tools, templates, and guides to help you calculate leave entitlements accurately.
Frequently asked questions about calculating leave entitlements
- For full-time employees working 38 hours per week: 4 weeks × 38 hours = 152 hours per year. This accrues progressively at approximately 2.923 hours per week (152 ÷ 52 weeks). For part-time employees, calculate pro-rata based on their regular weekly hours. For example, someone working 20 hours per week receives 4 weeks × 20 hours = 80 hours per year.
- Full-time employees are entitled to 10 days (76 hours for a 38-hour week) of paid personal/carer's leave per year under the National Employment Standards. Part-time employees receive pro-rata entitlements based on their ordinary hours of work. This leave accrues progressively throughout the year.
- Part-time leave is calculated pro-rata based on their regular hours. Formula: (Employee's weekly hours ÷ 38) × Full-time entitlement. For example, someone working 20 hours per week: (20 ÷ 38) × 152 hours annual leave = 80 hours per year.
- Leave entitlements accrue progressively throughout the year, typically calculated per pay period. For annual leave, full-time employees accrue approximately 2.923 hours per week. For personal/carer's leave, full-time employees accrue approximately 1.462 hours per week.
- No, overtime hours do not count towards leave accrual. Only ordinary hours of work are used to calculate leave entitlements. Leave accrues based on an employee's regular contracted hours, not including overtime or penalty rate hours.
Regulatory sources
This guide is aligned with official Australian workplace regulations on leave entitlements.
Automate leave calculations
RosterElf tracks leave balances in real-time and calculates entitlements automatically based on employment type. Built for Australian small businesses.
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