Leave Loading: What It Is & Who Gets the 17.5%
Leave loading — often called annual leave loading — is an extra payment added on top of your annual leave pay, usually 17.5%. So if your base pay is $1,000 for a week of leave, with loading you'd be paid $1,175.
Here's the part most people get wrong: leave loading is not an automatic right. It isn't part of the National Employment Standards (NES), and the Fair Work Act doesn't guarantee it.
Whether you get it depends entirely on your award, enterprise agreement or employment contract.
It's also one of the most commonly underpaid entitlements — frequently forgotten when someone leaves a job.
And since January 2025, intentional underpayment of entitlements is a criminal offence, so getting it right matters more than ever.
This guide explains what leave loading is, where it came from, how the 17.5% is calculated, who actually gets it, when it's paid, and the mistakes that catch employers and employees out.
What it is
An extra payment — usually 17.5% — on top of your annual leave pay, where an award, agreement or contract provides for it.
Why it matters
It's widely misunderstood as automatic (it isn't) and frequently missed on termination — a real, and now criminal, underpayment risk.
What this guide covers
The definition, its origins, how the 17.5% works, who's entitled, when it's paid, the tax treatment, and the common mistakes.
What is Leave Loading?
Leave loading is an additional payment made on top of an employee's ordinary pay when they take annual leave — most commonly 17.5%.
It's paid because of, and at the rate set by, an applicable award, enterprise agreement or employment contract.
It is a sub-topic of annual leave generally: the leave itself is a guaranteed NES entitlement, but the loading on top of it is not. That distinction is the single most misunderstood thing about it.
In plain English
Leave loading is a "holiday bonus" on your leave pay — but only if your award, agreement or contract says you get it.
There's no law that gives it to everyone, so the only way to know is to check the instrument that covers your job.
✓ Leave loading IS
- Extra pay on top of your annual leave pay
- Usually 17.5% (sometimes the greater of 17.5% or your penalty rates)
- Set by an award, enterprise agreement or contract
- Taxed as part of your normal income
✗ Leave loading is NOT
- An automatic National Employment Standards (NES) entitlement
- Guaranteed by the Fair Work Act for everyone
- Tax-free (the old tax concession was removed years ago)
- The same thing as casual loading or penalty rates
Where Leave Loading Came From
Leave loading dates back to the union movement of the 1970s.
The logic was simple and still holds: many workers earned a meaningful part of their income from overtime, weekend work and shift penalties — earnings they lost while on annual leave.
Without some compensation, taking a holiday meant taking a pay cut, which discouraged people from using the leave they were entitled to.
Leave loading was introduced to close that gap, so employees weren't financially worse off for taking a break.
Why this history still matters
Because loading exists to compensate for lost penalty earnings, many awards pay the greater of 17.5% or the penalty rates the employee would have earned had they been working.
That's why leave loading is closely tied to shift and weekend work — and why it isn't a flat, universal number.
How the 17.5% Works
The standard rate is 17.5% of your ordinary annual leave pay. In most cases the calculation is straightforward — you take your normal pay for the leave period and add 17.5%.
The inputs
Base rate: $30/hour
Ordinary week: 38 hours
Leave taken: 4 weeks
The calculation
$30 × 1.175 = $35.25/hour for the leave period.
Over four weeks, that's roughly an extra $800 on top of normal leave pay.
The "greater of" twist
If you'd normally earn weekend or shift penalties, your award may pay the greater of 17.5% or those penalty rates — so check which applies to you.
💡 Loading is taxed — it's not a tax-free bonus
A common myth is that leave loading is tax-free. It isn't.
Leave loading is taxed as part of your normal income.
A long-standing tax concession on leave loading was removed years ago, so it's treated like the rest of your pay.
Who Gets Leave Loading?
This is where the misconceptions live. There's no single answer — it depends entirely on the instrument that covers your employment.
Here's how to work out whether you're entitled.
Award-covered employees
Check your modern award. Many provide 17.5% leave loading.
The Contract Call Centres Award (MA000023), for example, includes a 17.5% annual leave loading provision.
Enterprise agreement employees
Your entitlement is whatever the agreement says. Some match 17.5%, some set a different rate, and some don't include loading at all — read the agreement.
Award-free employees
If no award or agreement covers your role, you only get loading if your employment contract provides for it. There's no automatic right.
Casual employees
Casuals generally don't accrue paid annual leave, so there's no leave to load. Instead they're paid a casual loading (typically 25%) to compensate — a different thing entirely.
Don't assume — check. The only reliable way to know if leave loading applies to you is to read your award, enterprise agreement or contract.
This guide is general information, not legal or financial advice; for your specific situation, check the Fair Work Ombudsman or speak with your HR team or union.
When Leave Loading is Paid
There are two moments leave loading comes into play — and the second one is where most of the underpayment happens.
When you take annual leave
Loading is paid at the same time as your annual leave pay — so the higher rate lands in the pay run covering your time off. This is the part everyone expects.
When you leave the job (termination)
When employment ends, you're paid out any accrued but untaken annual leave.
Where the award or agreement requires it — and most modern awards that provide loading do — leave loading must be paid on that unused leave too. It's a frequently missed obligation.
The termination trap
Whether loading is owed on a termination payout depends on the wording of the specific award or agreement: some require it, some are silent (in which case it generally isn't required), and a few say it's only payable on leave taken during employment.
Because it varies, it's one of the most common payroll errors — and worth checking carefully on every final pay.
Why Leave Loading Matters
It might be "just 17.5%", but it adds up — and getting it wrong has consequences on both sides of the pay slip.
For employees
It's real money — often hundreds of dollars per holiday, and a meaningful sum on a final pay. Knowing whether your award provides it helps you check you're being paid correctly.
For employers & payroll
Leave loading is an easy entitlement to misconfigure — especially on termination and for the "greater of" rule. Getting it right protects the business and the people in it.
For compliance
Since January 2025, intentional underpayment of employee entitlements is a criminal offence under the Fair Work Act. Loading errors are no longer just a back-pay issue.
Common Leave Loading Mistakes
Most leave loading errors come from a handful of recurring misunderstandings. These are the ones to watch.
❌ Assuming everyone's entitled
Leave loading isn't an automatic right. It depends on the award, agreement or contract.
Paying it to someone who isn't entitled, or denying it to someone who is, both cause problems.
❌ Forgetting it on termination
The most common error. Where the award requires loading on unused annual leave, it must be included in the final pay — but it's routinely left off.
❌ Ignoring the "greater of" rule
Some awards pay the greater of 17.5% or the penalty rates the employee would have earned. Defaulting to a flat 17.5% can underpay shift and weekend workers.
❌ Thinking it's tax-free
Leave loading is taxed like normal income. The old tax concession is long gone — budgeting as if it's tax-free leads to surprises.
❌ Confusing it with casual loading
Casual loading (typically 25%) compensates casuals for not getting paid leave.
Leave loading is paid on annual leave for permanent staff. Different concepts, different rates.
❌ Never checking the actual award
Relying on "what we've always done" instead of the current award or agreement is how systemic errors creep in. Check the instrument, not the habit.
The stakes have changed: intentional underpayment of entitlements — including leave loading — became a criminal offence under the Fair Work Act in January 2025.
Honest mistakes are treated differently from deliberate underpayment, but the message is clear: get the detail right.
This is general information, not legal advice — confirm your obligations with the Fair Work Ombudsman or appropriate professional.
Frequently Asked Questions About Leave Loading
What is leave loading?
Leave loading (or annual leave loading) is an extra payment — most commonly 17.5% — added on top of your ordinary pay when you take annual leave.
It's paid where an award, enterprise agreement or employment contract provides for it.
Is everyone entitled to leave loading?
No — and this is the biggest misconception. Leave loading is not part of the National Employment Standards and isn't guaranteed by the Fair Work Act.
You only get it if your award, enterprise agreement or contract includes it. The only way to be sure is to check the instrument that covers your job.
Is leave loading always 17.5%?
17.5% is the common standard, but not a universal law. Your actual rate is whatever your award, agreement or contract sets.
Some awards also pay the greater of 17.5% or the penalty rates you'd otherwise have earned, which can be more than 17.5% for shift and weekend workers.
Is leave loading paid when you leave a job?
Often, yes.
When employment ends you're paid out accrued but untaken annual leave, and where the award or agreement requires it — as most modern awards that provide loading do — leave loading must be included on that unused leave.
It depends on the specific wording, and it's one of the most frequently missed payments in a final pay, so it's worth checking carefully.
Is leave loading taxed?
Yes. Leave loading is taxed as part of your normal income.
The tax concession that once applied to leave loading was removed years ago, so it's treated like the rest of your wages. This is general information, not financial advice.
Do casual employees get leave loading?
Generally no, because casuals don't accrue paid annual leave — so there's no leave to load.
Instead, casuals are usually paid a casual loading (commonly 25%) to compensate for not receiving paid leave and other permanent entitlements. Casual loading and leave loading are different things.
Does the Fair Work Act require leave loading?
No. The Fair Work Act and the National Employment Standards guarantee paid annual leave, but not loading on top of it.
Leave loading comes from awards, enterprise agreements and contracts — not the Act itself. That's why entitlement varies so much between jobs.
How is leave loading calculated?
In most cases you take your ordinary pay for the leave period and add the loading percentage — usually 17.5%. So $1,000 of leave pay becomes $1,175.
Where the "greater of 17.5% or penalty rates" rule applies, you compare the two and pay whichever is higher. Always calculate from the rate in your specific award or agreement.
Where to Next
Summary: Leave Loading
Leave loading is an extra payment — usually 17.5% — added on top of your annual leave pay, but only where an award, enterprise agreement or contract provides for it.
It is not a National Employment Standards entitlement and the Fair Work Act doesn't guarantee it, which is the single most misunderstood thing about it.
It exists to make sure people aren't worse off financially for taking the leave they're owed.
The two things to get right are the rate and the timing.
Many awards pay the greater of 17.5% or the penalty rates the employee would have earned, and loading is frequently owed — and frequently missed — on unused annual leave when someone leaves a job.
It's also taxed like normal income, not tax-free.
If you're an employee, check whether your award or agreement provides loading so you can confirm you're paid correctly.
If you're an employer, get the configuration right — especially on termination — because since January 2025 intentional underpayment is a criminal offence.
When in doubt, check the Fair Work Ombudsman, your award or agreement, or speak with your HR team or union. This guide is general information, not legal or financial advice.
