Modern Award changes – Fact Sheet 7 – Annual leave loading

Frequently asked questions regarding annual leave loading

How is annual leave loading calculated?

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

• their ordinary time hourly rate (as defined under Clause 2); and
• a loading of 17.5% calculated on the employees ordinary time hourly rate.

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.

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 2 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. 

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.