Leave Entitlements in Australia: The Complete Small Business Guide for 2026

Australian employees have some of the most comprehensive leave entitlements in the world. As a small business owner, you are legally required to provide and correctly calculate a range of leave types — and the rules are more complex than many employers realise.

This guide covers every major leave type, how it accrues, how it is paid, and the common mistakes that cost Australian SMBs thousands of dollars in back-pay.

The National Employment Standards

Leave entitlements for most Australian employees are set by the National Employment Standards (NES) in the Fair Work Act 2009. The NES provides minimum entitlements — modern awards and enterprise agreements can provide more, but cannot provide less.

The NES covers employees in the national workplace relations system, which includes most private sector employees in Australia (excluding those in Western Australia covered by state instruments).

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Annual Leave

How Much Annual Leave?

Full-time and part-time employees are entitled to 4 weeks of paid annual leave per year, based on their ordinary hours of work. Shift workers under most awards are entitled to 5 weeks.

Leave accrues progressively throughout the year. A full-time employee working 38 hours per week accrues approximately 2.923 hours of annual leave per week.

Annual Leave Loading

Many modern awards (and some enterprise agreements) require employers to pay a leave loading of 17.5% on top of the employee's base rate when they take annual leave. Some awards instead require the higher of the leave loading or the penalty rates the employee would have earned had they worked that period.

This is a frequently missed obligation, particularly for small businesses that process payroll without specialist HR software.

Annual Leave and Casuals

Casual employees do not accrue paid annual leave. The 25% casual loading is intended to compensate for this (and for not receiving sick leave and other entitlements).

Taking Annual Leave

Employees can take annual leave at an agreed time. Employers can direct employees to take annual leave in certain circumstances — for example, if excessive accruals have built up — but only in accordance with the applicable modern award.

Cashing Out Annual Leave

Some awards allow employees to cash out accrued annual leave, provided:

• The employee genuinely agrees (not under duress)
• After cashing out, the employee retains at least 4 weeks of accrued leave
• The employee receives at least the same amount they would have been paid to take the leave

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Personal/Carer's Leave (Sick Leave)

How Much Personal Leave?

Full-time and part-time employees are entitled to 10 days of paid personal/carer's leave per year. This is often called "sick leave" but it covers both personal illness or injury and caring for immediate family or household members.

Part-time employees accrue personal leave proportionally to their ordinary hours.

Evidence Requirements

Employers may require employees to provide evidence (e.g., a medical certificate or statutory declaration) for personal leave. However, you cannot require evidence that would be "unreasonable in the circumstances." Requiring a medical certificate for a single-day absence on a Monday is considered reasonable; requiring one every time without notice may not be.

Casuals and Unpaid Carer's Leave

Casual employees and irregular workers cannot access paid personal/carer's leave, but they are entitled to 2 days of unpaid carer's leave per occasion to care for an immediate family or household member who is ill, injured, or affected by an unexpected emergency.

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Compassionate Leave

All employees — including casuals — are entitled to 2 days of paid compassionate leave per occasion for:

• The death of an immediate family or household member
• A serious illness or injury of a member of their immediate family or household that poses a risk to their life

Casual employees receive unpaid compassionate leave.

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Family and Domestic Violence Leave

Since 1 February 2023 (for large employers) and 1 August 2023 (for small businesses with fewer than 15 employees), all employees — including casuals — are entitled to 10 days of paid family and domestic violence leave per year.

This leave does not accrue progressively — employees get the full 10 days at the start of each 12-month period of employment.

Record-keeping obligations for this type of leave are stricter than for other leave types. Employers must not record the reason for the leave on pay slips in a way that could jeopardise the employee's safety. The pay slip should simply reference the leave as "other leave" or a similarly neutral description.

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Parental Leave

Under the NES, employees with 12 months of continuous service are entitled to up to 12 months of unpaid parental leave, with the right to request an additional 12 months.

Parental leave is available for birth parents, adoptive parents, and birth-related leave for partners.

Paid Parental Leave is a separate government payment administered through Services Australia (Centrelink), not by employers. However, some modern awards and enterprise agreements require employers to top up government parental leave payments, so check your applicable instruments.

A separate article on parental leave obligations covers this in detail.

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Long Service Leave

Long service leave entitlements vary by state and territory. Unlike most leave types, long service leave is not covered by the NES — it is governed by state legislation.

General patterns (vary significantly by jurisdiction):

• In most states, long service leave entitlement is triggered after 7–10 years of continuous service
• The entitlement is typically 8.67 weeks (2 months) after 10 years, prorated for earlier access
• In some states (e.g., Victoria, Queensland), employees who resign or are made redundant after 7 years may be entitled to a pro-rata payment
• In others (e.g., New South Wales), the threshold for pro-rata access can be lower

Small businesses regularly underpay long service leave because:

1. They do not check the state rules applicable to their location
2. They terminate employees just before the entitlement triggers
3. They fail to include long service leave in redundancy or resignation calculations

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Community Service Leave

Employees are entitled to unpaid community service leave to engage in activities like jury duty or voluntary emergency management (e.g., volunteer fire fighting).

Jury duty is a special case — employees are entitled to paid leave for the first 10 days of jury service, minus any jury service payment received.

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Public Holidays

Full-time and part-time employees are entitled to paid time off on public holidays. The applicable public holidays vary by state and territory and include national days (e.g., Australia Day, ANZAC Day) and state-specific holidays.

If an employee works on a public holiday, they are entitled to penalty rates or an alternative arrangement — as specified in their modern award or enterprise agreement.

You can request that an employee work a public holiday, but you cannot require them to do so unreasonably.

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Common Leave Mistakes That Lead to Back-Pay Claims

1. Not Paying Leave Loading

Employers on award-covered arrangements frequently fail to pay the 17.5% leave loading when employees take annual leave. This is a systematic underpayment that compounds over years.

2. Incorrect Part-Time Accruals

Part-time employees accrue leave proportionally to their hours. A 3-day-per-week employee accrues leave at 60% of the full-time rate. Payroll systems set up for full-time rates will overpay or underpay part-timers.

3. Incorrectly Excluding Casuals from Family and Domestic Violence Leave

Since 2023, casuals are entitled to paid family and domestic violence leave. This surprises many employers who assume casuals have no paid entitlements.

4. Missing Long Service Leave in Termination Payments

When an employee's employment ends, you must pay out all accrued annual leave. For employees with long service leave entitlements, that must also be included. Forgetting this is both a compliance breach and a debt to the employee.

5. Recording Family and Domestic Violence Leave Incorrectly

Disclosing that an employee took family and domestic violence leave on their pay slip can jeopardise the employee's safety and expose you to a serious compliance breach.

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How Reguladar Helps

Leave entitlements are one of the most complex parts of Australian employment law — they interact with modern awards, state legislation, enterprise agreements, and the NES, and the rules differ for full-time, part-time, and casual employees.

Reguladar maps your obligations based on your business profile — your state, your applicable awards, and your workforce mix — and surfaces the obligations and deadlines that apply to you specifically. Instead of researching leave rules each time a situation arises, you have a single dashboard that tells you where you stand.

Ready to stop guessing about leave obligations? Start your free compliance check at Reguladar and get clarity on your full employment law obligations today.