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Annual leave is paid time off; ordinary unpaid leave is time away without pay and usually pauses annual-leave accrual. Under the National Employment Standards (NES), most full-time and part-time employees receive four weeks of annual leave each year, while qualifying shiftworkers receive five weeks. Casual employees do not receive paid annual leave.
Unpaid leave is not one single entitlement. Unpaid parental, carer’s and community-service leave are statutory categories, and casual employees can receive unpaid compassionate leave. Other unpaid absences require agreement with the employer. Your award, enterprise agreement, contract and workplace policy can change notice, evidence, shutdown, loading and direction rules.
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Annual leave and unpaid leave compared
| Issue | Annual leave | Unpaid leave |
|---|---|---|
| Pay | Paid at the employee’s current base pay rate for the leave hours. An award or enterprise agreement may add annual-leave loading. | No pay for the period away from work. |
| Who can access it | Generally a NES entitlement for full-time and part-time employees: four weeks per year, or five weeks for qualifying shiftworkers. | Some categories are NES entitlements. Other unpaid leave is available only if the employer agrees. |
| Accrual | Starts on the first day of employment and unused leave rolls over. Paid leave and some forms of service leave continue to count under the applicable rules. | Ordinary unpaid leave generally stops annual-leave and sick/carer’s-leave accrual. The exact treatment depends on the statutory category and industrial instrument. |
| Approval | An employer may refuse a request only when the refusal is reasonable. Notice and evidence requirements come from the applicable award, agreement, contract or policy. | Statutory categories have their own notice and evidence rules. Discretionary unpaid leave depends on an agreed arrangement. |
| Public holidays | A public holiday on a day the employee would ordinarily work is paid and does not reduce the annual-leave balance. | A public holiday during unpaid leave is generally unpaid, subject to the rules of the leave category and any shutdown arrangement. |
| When employment ends | Accrued, unused annual leave is generally paid in the final pay, including any loading that the applicable award or agreement requires. | There is no unpaid-leave balance to pay out. The period’s effect on service depends on the leave category. |
Who receives annual leave in Australia?
Full-time and part-time employees
Annual leave forms part of the NES. Full-time and part-time employees generally receive four weeks of paid annual leave for each year of service, calculated by reference to their ordinary hours. A part-time employee therefore receives a pro-rata entitlement based on the employee’s ordinary pattern, not the entitlement of a full-time colleague.
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Annual leave begins accruing from the first day of employment. It is not a benefit that starts only after a probation period. If you do not use the balance, it normally carries into the next year rather than disappearing at the anniversary date.
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Qualifying shiftworkers
Some employees who meet the shiftworker definition in their award or registered agreement receive five weeks of annual leave instead of four. “Shiftworker” is not a label that every employer can apply casually; the relevant award or agreement determines whether your roster qualifies and how the additional week is calculated.
Casual employees
Casual employees do not receive paid annual leave under the NES. A casual loading is intended to compensate for the absence of entitlements such as annual leave, although the correct classification and pay rate depend on the employment arrangement and applicable instrument. A casual can still have access to statutory unpaid leave, including unpaid carer’s leave and unpaid compassionate leave, where the eligibility rules are met.
How accrual is measured
Your balance is tracked in hours or days according to payroll practice, but the legal entitlement is tied to ordinary hours. Changes in ordinary hours can change the rate at which leave accrues. Overtime and hours that are not ordinary hours generally do not increase the annual-leave entitlement in the same way. Ask payroll how your workplace records the balance if your roster changes frequently.
What counts as unpaid leave?
Unpaid leave created by the NES
The NES recognises several unpaid categories:
- Unpaid parental leave: eligible employees may take the statutory entitlement to care for a new child, subject to the NES eligibility, notice and evidence rules.
- Unpaid carer’s leave: an employee can take this leave to provide care or support to an immediate family or household member who is ill, injured or affected by an unexpected emergency.
- Unpaid community service leave: eligible community-service activities, including recognised emergency-management activities, have specific notice and evidence requirements.
- Unpaid compassionate leave for casuals: a casual employee may be entitled to unpaid compassionate leave for a qualifying death, life-threatening illness or injury affecting an immediate family or household member.
Each category has its own definition, evidence and notice rules. Do not assume that a manager’s informal approval changes the statutory requirements; make the request in the form your workplace requires and retain supporting documents.
Ordinary unpaid leave by agreement
Employees sometimes ask for unpaid leave after annual leave has been exhausted, for travel, study, personal commitments or a longer break. Outside a statutory category, the employer generally has no automatic obligation to approve the request. The parties should agree in writing on the dates, whether the employee can work elsewhere, how the absence affects benefits and the date of return.
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An approval email should state whether the arrangement is a one-off period or a recurring pattern. It should also say what happens if the employee wants to return early or extend the leave. An unpaid absence without agreement can be treated as unauthorised absence and may create disciplinary risk.
How unpaid leave affects accrual
Ordinary unpaid leave generally does not count as service for annual-leave accrual, so the balance usually stops increasing during the absence. The same principle generally applies to personal/carer’s-leave accrual. Paid leave continues to count, and some service-related leave has special treatment. Statutory unpaid categories can have category-specific service rules, so check the applicable Fair Work guidance, award or agreement before calculating a long absence.
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Unpaid leave can also affect the timing of other benefits that depend on service. Payroll should confirm the effect on your anniversary date, bonus eligibility, salary progression and any employer-provided benefits rather than assuming every benefit pauses in the same way.
How annual-leave pay works
Base pay for the leave hours
Annual leave is paid at the employee’s current base pay rate for the hours that would ordinarily have been worked. A promotion or permanent pay increase that takes effect before the leave is taken is therefore relevant to the rate used. Overtime, penalties and allowances are not automatically included in every workplace’s annual-leave payment.
Annual-leave loading
Some modern awards and enterprise agreements provide annual-leave loading. Loading is not a universal NES addition. Check the instrument that covers your role for the percentage, the hours to which it applies and whether it is paid when leave is taken or on another schedule. The same rule should be used when calculating the annual-leave amount included in final pay.
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Public holidays during leave
When a public holiday falls inside annual leave
If a public holiday falls on a day you would ordinarily have worked, you are paid for the public holiday and that day is not deducted from your annual-leave balance. The leave period may therefore contain fewer deducted leave days than calendar days.
If the public holiday falls on a day you would not ordinarily work, it does not create an extra payment and does not reduce annual leave. The roster, not simply the fact that the business is closed, determines whether the day was an ordinary workday.
When a public holiday falls inside unpaid leave
A public holiday during unpaid leave is generally unpaid because there are no ordinary hours being paid for that absence. Category-specific rules, a workplace shutdown and the wording of an award or agreement can change the result. Confirm the treatment with payroll before assuming the public holiday will be paid.
Can an employer refuse annual leave?
Employees request annual leave under the process in their award, agreement, contract or workplace policy. There is no single NES notice period for every job. Your instrument may require a particular form, advance notice or evidence of the dates requested.
The Fair Work Ombudsman states: “An employee can only refuse an employee’s request to take annual leave if the refusal is reasonable.” Reasonableness is fact-specific. A refusal may be defensible where the requested timing would create a serious operational problem, overlap with an announced shutdown or conflict with a valid workplace rule. A blanket practice of refusing every request, or refusing without considering the circumstances, is more difficult to justify.
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Employer-directed leave and shutdowns
An employer may be able to direct employees to take annual leave during a genuine shutdown or when an award or agreement permits a direction. The direction must comply with the applicable instrument and cannot simply rely on an internal policy that conflicts with the NES. During a shutdown, check the notice period and whether the rule applies to your classification.
Some instruments also allow an employer to direct an employee with an excessive leave balance to take leave, usually after a consultation process and subject to limits. Ask for the clause being relied on if you receive a direction you do not understand.
How to choose between annual and unpaid leave
| Your situation | Usually the better starting point | Checks before applying |
|---|---|---|
| Planned holiday and enough accrued balance | Annual leave | Confirm the balance, notice rule, public holidays and any annual-leave loading. |
| Annual leave balance is exhausted | Unpaid leave, if approved | Get written agreement on dates, return date and the effect on accrual and benefits. |
| Caring for an ill family or household member | Statutory carer’s leave | Check whether paid or unpaid carer’s leave applies and what evidence is required. |
| New child or adoption responsibilities | Statutory parental leave | Follow the NES notice and evidence process and check the effect on annual-leave accrual. |
| Emergency or recognised community activity | Community-service leave | Provide the required notice and evidence and confirm whether the particular activity qualifies. |
| Casual employee facing a qualifying family tragedy | Unpaid compassionate leave | Confirm the statutory definition and notify the employer as soon as practicable. |
Step-by-step: making a leave request
- Identify your coverage. Find the modern award, enterprise agreement, contract and workplace leave policy that apply to your job. These documents control notice, evidence, shutdown and loading details.
- Check your balance and roster. Confirm accrued annual-leave hours, ordinary workdays, planned shutdown dates and any public holidays in the period.
- Choose the correct category. Use annual leave for a paid holiday, a statutory unpaid category when its eligibility test is met, or an agreed ordinary unpaid-leave arrangement for another reason.
- Submit the request in the required channel. Use the rostering system, form or email specified by the employer. State the first and last date, the expected return date and whether the request is paid or unpaid.
- Attach evidence when required. Statutory leave may require a medical certificate, statutory declaration or other reasonable evidence. Ask what is acceptable if the policy is unclear.
- Wait for confirmation. Keep the approval or refusal, including any conditions. Do not treat silence as approval where the workplace requires written confirmation.
- Check the payslip after leave. Verify annual-leave hours deducted, public-holiday treatment, loading and any unpaid period. Raise an error promptly with payroll.
Worked examples
Annual leave with a public holiday
An employee normally works Monday to Friday and books annual leave for a week containing a Monday public holiday. If Monday is ordinarily a workday, the public holiday is paid and only the other ordinary workdays are deducted from the annual-leave balance. If Monday is not part of that employee’s ordinary roster, the public holiday does not generate a payment or a leave deduction.
Part-time employee
A part-time employee’s annual leave is based on the employee’s ordinary hours and pattern. A request covering the employee’s usual three-day week should be recorded against those ordinary hours, not converted into the full-time entitlement. Payroll can explain whether the system displays the balance in hours or days.
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An employee with no annual-leave balance asks for four weeks away for personal reasons. Unless an award, agreement or policy provides an entitlement, the employer may agree or refuse. If agreed, the written arrangement should state that the absence is unpaid and explain that ordinary unpaid leave generally pauses annual-leave accrual.
What happens when employment ends?
Unused annual leave
When employment ends, accrued unused annual leave is generally paid in the final pay. The calculation should use the current base pay rate and include any annual-leave loading required by the applicable award or agreement. Check the final payslip rather than assuming the balance was paid correctly.
Unpaid leave
Unpaid leave does not create a cash balance. There is nothing to pay out for the days you were absent without pay. The period may affect the amount of annual leave accrued before termination, depending on the category and the service rules that applied.
Other leave and long service
Long-service leave is governed by state or territory legislation rather than one national NES rule. Its accrual and payout treatment can differ from annual leave, especially after unpaid absences. Obtain the rule for the state or territory where your employment is based and check any enterprise agreement.
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- “My balance disappeared at the anniversary date.” Annual leave normally rolls over. Ask payroll for the transaction history and the instrument supporting any adjustment.
- “A public holiday was deducted from my leave.” Compare the holiday with your ordinary roster. If you would ordinarily have worked, ask payroll to correct the deduction.
- “My manager refused without explaining why.” Request the refusal and the reason in writing, then check the applicable award, agreement or policy for a review process.
- “I was told unpaid leave has no effect on accrual.” Ordinary unpaid leave generally pauses annual-leave accrual. Ask for a written calculation and distinguish ordinary unpaid leave from a statutory category.
- “My final pay omitted annual-leave loading.” Check whether your award or enterprise agreement requires loading on termination and provide the clause to payroll.
- “I am a casual and was told I cannot take any leave.” Casuals do not receive paid annual leave, but they may qualify for statutory unpaid categories. Check the relevant eligibility rules rather than treating all leave as unavailable.
Where to get help with a dispute
Start by asking payroll or human resources for the calculation, the leave category used and the industrial instrument relied on. Keep rosters, payslips, requests, approvals, refusals and medical or other evidence.
For an unresolved entitlement or refusal, contact the Fair Work Ombudsman for information about the NES and your award. A union, employee representative or qualified workplace-relations adviser can help interpret an enterprise agreement, classification or state-based long-service rule. If the issue concerns discrimination, adverse action or another legal claim beyond a leave calculation, obtain independent legal advice.
Quick Recap
Key takeaways
- Annual leave is paid, accrues from the first day for eligible non-casual employees and normally rolls over.
- Four weeks is the general NES entitlement; qualifying shiftworkers receive five weeks.
- Casual employees do not receive paid annual leave, but statutory unpaid leave may still apply.
- Ordinary unpaid leave is unpaid and generally pauses annual-leave accrual; statutory categories have their own rules.
- An employer can refuse annual leave only reasonably, and shutdown or direction rules must come from the applicable industrial instrument.
- A public holiday on an ordinary workday during annual leave is paid and not deducted; during unpaid leave it is generally unpaid.
- Accrued unused annual leave is generally paid out when employment ends, including any required loading.
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