Leave Entitlements Explained for Small Employers
Every permanent employee in Australia gets four weeks' annual leave, 10 days' paid sick and carer's leave, two days' compassionate leave per occasion and 10 days' paid family and domestic violence leave each year — plus unpaid parental leave, community service leave and public holidays. These come from the National Employment Standards (NES) and apply no matter how small your business is. Long service leave is the odd one out: it's set by your state or territory, not the Commonwealth.
The leave entitlements at a glance
| Leave type | Amount | Full-time and part-time | Casuals |
|---|---|---|---|
| Annual leave | 4 weeks per year (5 for some shift workers) | Paid, accumulates | Not entitled |
| Sick and carer's leave | 10 days per year | Paid, accumulates | 2 days unpaid carer's leave per occasion |
| Compassionate leave | 2 days per occasion | Paid | Unpaid |
| Family and domestic violence leave | 10 days per year | Paid, does not accumulate | Paid, same 10 days |
| Parental leave | Up to 12 months (plus a right to request 12 more) | Unpaid | Unpaid, if regular and systematic |
| Community service leave | As needed; jury duty make-up pay for 10 days | Unpaid except jury duty | Unpaid |
| Public holidays | Right to be absent | Paid if it's an ordinary working day | Unpaid |
| Long service leave | Set by state law | Paid | Often included — check your state |
Annual leave: four weeks, accruing hour by hour
Annual leave doesn't land in an employee's account on their work anniversary. It accrues progressively based on ordinary hours worked, so someone who resigns after four months has roughly a third of a year's leave to be paid out.
The rate is four weeks divided by 52, or about 0.0769 hours of leave per ordinary hour worked — 152 hours a year for a full-timer on 38 hours (38 × 4). Overtime doesn't count towards accrual, but paid leave does: employees keep accruing while on annual or paid sick leave.
Part-time employees get four weeks of their hours
This trips up more small employers than anything else. Part-timers get the same four weeks, measured against their own ordinary hours.
Say Mia works three days a week, 7.6 hours a day, so 22.8 ordinary hours a week:
- Annual leave: 4 × 22.8 = 91.2 hours a year, which is 12 of her working days
- Sick and carer's leave: one twenty-sixth of her yearly ordinary hours, so (22.8 × 52) ÷ 26 = 45.6 hours, which is 6 of her working days
Track leave in hours, not days, or you'll eventually get this wrong. For the difference between the three employment types and what each costs you, see casual vs part-time vs full-time.
Annual leave loading
Loading isn't in the NES, but most modern awards include a 17.5% loading on annual leave. If an award covers your employee, check it — modern awards explained covers how to find the right one.
Sam earns $30.00 an hour and takes two weeks (76 hours) of annual leave:
- Base pay: 76 × $30.00 = $2,280.00
- Loading at 17.5%: $2,280.00 × 0.175 = $399.00
- Total: $2,679.00
Loading is payable on termination if the employee would have received it while on leave, even where the award says otherwise. Some awards also let employees take the higher of loading or the penalties they would have earned, so read the clause.
Cashing out annual leave
You can cash out annual leave, but not casually. Three rules apply in every case:
- The employee must have at least four weeks' leave left after the cash-out
- There must be a separate written agreement signed on each occasion, stating the amount cashed out, the payment and the date
- The payment must be at least what they'd have been paid for taking the leave
Most awards add a cap of two weeks cashed out in any 12-month period. You can't require or pressure an employee to agree — doing so is a breach in itself.
More than eight weeks' accrued leave is an "excessive accrual". Either of you can then ask to confer and genuinely try to agree on reducing it, and many awards let you direct the employee to take leave once set conditions are met.
Sick and carer's leave
Ten days a year, paid at the base rate for ordinary hours, accruing progressively and rolling over year to year. It's one pooled entitlement covering the employee's own illness or injury and caring for an immediate family or household member who is ill, injured or hit by an unexpected emergency.
It is never paid out on termination. That's the key difference from annual leave.
You can ask for reasonable evidence — a medical certificate or statutory declaration — even after a single day's absence, provided your policy and contracts say so. Once the balance runs out, further absences are unpaid unless you agree otherwise.
Compassionate leave
Two days per occasion, paid for permanent employees and unpaid for casuals, when an immediate family or household member dies or suffers a life-threatening illness or injury. It also applies when the employee or their spouse or de facto partner has a miscarriage, or their baby is stillborn.
It's per occasion, not per year, so there's no annual cap. The two days can be one block, two separate days, or any period you both agree to.
Family and domestic violence leave
Ten days of paid leave in a 12-month period, for every employee including casuals and part-timers. Three features make it different from everything else:
- It's available in full from day one. It doesn't accrue, and it isn't pro-rated for part-timers or casuals
- It resets on the employee's work anniversary and doesn't carry over
- Casuals are paid what they would have earned for the hours they were rostered to work, including the 25% loading and any allowances
There's also a strict privacy rule: pay slips must not show that this leave has been taken, or show a balance for it. Most payroll systems record the payment as ordinary hours instead — confirm yours does before you need it, and keep any evidence separate from the personnel file.
Parental leave
Two separate things sit under this heading, and they're funded differently.
Unpaid parental leave (your obligation). Employees with at least 12 months' continuous service can take up to 12 months' unpaid leave, and can request a further 12 months, which you can only refuse on reasonable business grounds. Casuals qualify if their employment has been regular and systematic for 12 months with a reasonable expectation of continuing. For children born or adopted from 1 July 2026, up to 130 days can be taken flexibly — single days or short blocks rather than one continuous stretch.
Parental Leave Pay (the government's obligation). For a child born or adopted from 1 July 2026, the scheme provides 130 days, which is 26 weeks based on a five-day week, at $1,004.70 a week before tax (as at September 2026). Where a claimant has a partner, 20 days are reserved for the partner. The ATO also pays a 12% super contribution on Parental Leave Pay for children born or adopted from 1 July 2025.
You may be asked to pass the payment through your payroll; Services Australia funds you in advance, so you're not out of pocket. Employees can also be paid directly.
Long service leave: the state-based one
Long service leave sits outside the NES. The rules follow the state or territory where the employee works, so a two-state business runs two sets of rules.
| State or territory | Entitlement at the standard milestone |
|---|---|
| NSW | 2 months (8.67 weeks) after 10 years, plus 1 month per extra 5 years |
| Victoria | 1 week per 60 weeks of service; entitlement arises at 7 years |
| Queensland | 8.67 weeks after 10 years |
| Western Australia | 8.67 weeks after 10 years |
| South Australia | 13 weeks after 10 years |
| Tasmania | 8.67 weeks after 10 years |
| ACT | Entitlement arises at 7 years |
| Northern Territory | 13 weeks after 10 years |
A NSW employee reaching 10 years on ordinary weekly pay of $1,400 is owed 8.6667 × $1,400 = $12,133 in long service leave.
Two traps. Pro-rata payment on termination starts earlier than the full entitlement in most states — often at five or seven years — so someone resigning at year seven may still be owed money. And in construction, cleaning, security and community services, portable schemes may apply, where service follows the worker between employers.
Community service leave and public holidays
Community service leave covers jury duty and voluntary emergency management work such as SES or RFS callouts. It's unpaid with no fixed limit, except that permanent employees get make-up pay for the first 10 days of jury service — the gap between the court's payment and their base rate for ordinary hours. You can ask for evidence of what the court paid.
Public holidays give every employee the right to be absent. Permanent employees are paid at their base rate if the holiday falls on a day they'd normally work. You can ask someone to work a public holiday if the request is reasonable, and they can refuse if it isn't or if their refusal is reasonable. Award penalty rates then apply — see minimum wage and penalty rates 2026-27.
Recording leave properly
Leave records aren't optional. You must record leave taken and leave balances for each employee, keep those records for seven years, and make them available on request.
Set your payroll up once and it does the arithmetic: accrual by hours rather than days, separate categories per leave type, the right award loading and correct treatment on termination. Spreadsheets fail quietly here, usually on part-time accrual. Most payroll software handles all of it and files the Single Touch Payroll report at the same time.
Key takeaways
- Annual leave accrues progressively at four weeks of the employee's own ordinary hours — track it in hours, not days, or part-time accrual will drift
- Sick and carer's leave accumulates but is never paid out on termination; annual leave and long service leave are
- Family and domestic violence leave is 10 paid days available in full from day one for everyone including casuals, resets annually, and must not appear on a pay slip
- Cashing out annual leave needs a written agreement each time and at least four weeks left over
- Long service leave follows state law, and pro-rata payouts often start at five or seven years — well before the full entitlement
- Keep leave records for seven years and make sure your payroll software, not a spreadsheet, does the calculating
Where to get help
- Fair Work Ombudsman (fairwork.gov.au) — leave pages, the Leave Calculator, Pay and Conditions Tool and free templates including a cash-out agreement. Infoline 13 13 94
- Fair Work Commission (fwc.gov.au) — the full text of modern awards and enterprise agreements
- Services Australia (servicesaustralia.gov.au) — Parental Leave Pay eligibility, rates and employer obligations
- Your state or territory industrial relations body — for long service leave, which Fair Work doesn't cover: NSW Industrial Relations, Business Victoria, the Queensland Office of Industrial Relations and equivalents
- Your bookkeeper or BAS agent — for setting leave categories and accruals up correctly in payroll
- An employment lawyer or HR adviser — before terminating someone with a large leave balance, refusing a parental leave extension, or if you suspect years of underpaid leave
Frequently asked questions
How much annual leave does a part-time employee get?
Part-time employees get 4 weeks of their own ordinary hours, not 4 weeks of full-time hours. Someone working 22.8 hours a week accrues 91.2 hours of annual leave a year, which is 12 days at 7.6 hours each. The leave accumulates from year to year and is paid out when they leave.
Do casual employees get sick leave in Australia?
No, casuals don't get paid sick and carer's leave, and they don't get paid annual leave either — the 25% casual loading is compensation for that. Casuals do get 2 days of unpaid carer's leave per occasion, 2 days of unpaid compassionate leave per occasion, and the full 10 days of paid family and domestic violence leave each year.
Can I pay out an employee's annual leave instead of them taking it?
Only if the employee will still have at least 4 weeks of annual leave left after the cash-out, and only with a separate written agreement signed on each occasion. Most awards also cap cashing out at 2 weeks in any 12-month period. You can't pressure an employee into agreeing, and you must pay at least what they'd have received had they taken the leave.
When does an employee become entitled to long service leave?
It depends on your state, because long service leave sits in state law rather than the National Employment Standards. In NSW, Queensland, WA and Tasmania it's generally 8.67 weeks after 10 years with the same employer; Victoria and the ACT reach the entitlement at 7 years; South Australia and the Northern Territory give 13 weeks at 10 years.
How many weeks of paid parental leave can employees get in 2026?
For a child born or adopted from 1 July 2026, government Parental Leave Pay is 130 days, which is 26 weeks based on a five-day week, paid at $1,004.70 a week before tax (as at September 2026). It's funded by the government, not you, and the ATO pays a 12% super contribution on top for children born or adopted from 1 July 2025.
General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.