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Modern Award changes – Fact Sheet 7 – Annual leave loading

The Fair Work Commission (Commission) has confirmed changes to the Building and Construction General Onsite Award 2010 (Onsite Award) will commence from 1 July 2020. HIA recommends you consider the changes as some will have an immediate effect on your employee’s terms and conditions.

The annual leave loading clause

The annual leave loading clause under the Onsite Award has long been a source of confusion with the calculation method complex in terms of the application of the loading to allowances and rates of pay. A new method of calculation is to apply from 1 July 2020.

Frequently asked questions regarding annual leave loading

What is the new method of calculating annual leave loading?

During a period of annual leave, an employee must be paid:

  • their ordinary time hourly rate (as defined under Clause 3.1), and
  • a loading of 17.5% calculated on the employee’s ordinary time hourly rate.

Does the ordinary time hourly rate include allowances?

Yes. Depending on the classification of the employee it includes industry and tool allowances (travel is not included). You must refer to Clause 3.1 to determine the appropriate ordinary time hourly rate. 

Is annual leave loading payable on termination?

Yes. Where you pay out an employee’s annual leave on termination of employment, annual leave loading must also be paid on that amount. 

Example – Annual leave loading calculation 

Casey is a full-time carpenter, working a 38-hour week at the total weekly rate of $936.01 (inclusive of industry and tool allowance). Casey ordinarily uses his own car to get to and from work each day and therefore is paid a travel allowance of $17.43 per day. He is taking a week’s annual leave and is entitled to annual leave loading for the duration of the leave. Casey’s employer therefore pays $936.01 for the week’s annual leave (which is his ordinary weekly rate of pay, plus leave loading of 17.5%, being an additional $163.80 for the duration of the leave. He does not get paid travel allowance while on annual leave.

This information is part of a series of updates on the Modern Award changes aimed at assisting members understand the requirements. More information can be found in the articles in the ‘What to read next’ section. 

To find out more, contact HIA's Workplace Services team

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