Leave loading is an extra payment given on top of annual leave pay. Also known as holiday loading or annual leave loading, it is one of the many important leave entitlements Australian workers and their unions have fought for.
How Leave Loading Works
Paid annual leave is a minimum entitlement for Australian employees but leave loading is not. This means that your entitlement to leave loading will depend on your award or agreement.
How Much is Leave Loading?
Depending on your award or agreement, leave loading is usually around 17.5% extra pay on top of your annual leave pay. If you are terminated from your employment, you are usually entitled to be paid out for both annual leave and annual leave loading.
Should Your Employer Pay Leave Loading?
Contact your union if you are unsure of your leave loading entitlements or if you believe your employer has not met their payment obligations.
Funding for this factsheet was provided by:
- the Victorian Government as part of the uTech project; and
- the Fair Work Ombudsman.
Please note that the information given here is general information only and is not legal advice. For further assistance, it is recommended you speak to your union.
Frequently Asked Questions
What is recreation leave loading?
Leave loading is an extra payment that some workers are entitled to receive from their employer while on annual leave, on top of their base rate of pay.
Leave loading acts as a top-up to your standard base pay, and is intended to compensate workers for extra expenses incurred during leave.
Leave loading was achieved as a result of the labour movement in the 1970s. It was created to support workers who relied on overpay and increased overtime rates.
Through leave loading, these workers gained access to a similar pay rate for the same time taken on leave.
How does leave loading work?
Leave loading is usually an extra 17.5% on top of your normal wage. If you’re eligible, leave loading will be paid for the duration of your annual leave period.
If you’re eligible, you’ll usually receive your leave loading payment included in the same payment as your annual leave. This will usually be made as a standard, regular pay and may be receivable during or after your leave date.
Not everyone is entitled to annual leave loading, so it’s important to check with your employer and explore the details of your award or workplace agreement.
When you schedule your annual leave with your employer, ask about leave leading to confirm whether or not you are entitled, the percentage rate of your payment, and when you can expect to receive it.
When is leave loading paid?
Annual leave loading is usually paid at the same time that you receive payment for annual leave. An employer is not required to make any payments outside of regular pay cycles, so this payment will fall on the standard agreed upon date and period.
On completion or termination of your employment, in most circumstances, annual leave loading is to be paid out on any accrued annual leave balance.
What is the annual leave loading rate?
The standard leave loading rate in Australia is 17.5%.
You can use this simple formula to calculate your annual leave loading:
Annual leave loading = 4 × 17.5% × Employee’s Weekly Rate of Pay
You can expect this sum to be paid to you at the same time as your annual leave payment. This breakdown should appear on your payslip for the period in question.
Do you get leave loading on salary?
When and how your leave loading is paid variable and can require a discussion with your employer.
Some workers may receive an annual salary. Alternative, you may receive an all-inclusive hourly pay rate that includes annual leave loading. In this case, the payment does not need to be made separately from your salary.
If you are entitled to annual leave loading, then any remaining sum must be paid out when your employment ends.
How to calculate holiday leave loading?
To calculate your holiday leave loading, use this simple formula:
Annual Leave Loading = 4 × 17.5% × Employee’s Weekly Rate of Pay
To calculate your pro-rata leave loading, you can use the formula below:
Annual Leave Loading = (Weeks worked ÷ 40.6 × 4 × 17.5%) × Employee’s Weekly Rate of Pay
Is leave loading taxable?
Leave loading is taxable in Australia. However, the first $320 of this payment is not taxable.
This means that if your leave loading payment does not exceed the $320 amount, it’ll be excluded from tax.
How is leave loading taxed?
If you receive your leave loading on a pro-rata basis, the leave loading payment will be added to your earnings for this period and will be taxed accordingly.
When an employee resigns, their final payment will typically include a pay-out for any untaken leave, pro-rata bonuses and notice pay, if applicable. These payments are subject to normal income tax.
Is leave loading paid on termination?
When you resign, it’s standard practice that you’ll receive a final payment from your employer.
It’s advisable to check the calculator to confirm that you’ve received the correct sum and all final payouts that you’re entitled to.
This will include a payout for any accrued leave and leave loading if applicable. These payments are subject to normal income tax.
Is super payable on annual leave loading?
Annual leave loading is included in ordinary time earnings (OTE). As such, employers are required to pay superannuation contributions on this amount.
Generally, your leave loading payments are defined as in OTE because they’re related to annual leave. It is possible for an employer to decide they don’t need to pay super on annual leave loading.
This is possible if they consider the leave loading to be compensation for overtime wages that you could have earned if you’d worked during this period.
However, your employer will need to provide a record of this classification of annual leave loading. Without it, the ATO could rule that your employer has withheld super contributions and be liable to pay a fine.