Do Part-Time Employees Get Holiday Pay in Australia? Employer’s Guide

If you’re hiring part-time staff, annual leave (often called “holiday pay”) is one of the first compliance questions to nail. Getting it right keeps your team happy, protects your business from underpayment claims, and means you won’t be scrambling at year-end to fix leave balances.

The short answer: yes, permanent part-time employees in Australia are generally entitled to paid annual leave under the National Employment Standards (NES). But there are important rules about how it accrues, how you approve and pay it, and what to include in your contracts and policies.

In this guide, we’ll explain exactly how holiday pay works for part-time employees, how to calculate it, common pitfalls to avoid, and the practical steps to stay compliant and confident as an employer.

What Is Holiday Pay For Part-Time Employees?

Under the NES in the Fair Work Act 2009, permanent employees (both full-time and part-time) are entitled to four weeks of paid annual leave for every year of service. Some shiftworkers covered by particular awards or agreements may be entitled to five weeks.

Part-time employees receive the same entitlement on a pro‑rata basis. That means they accrue leave in proportion to their ordinary hours of work compared to a full-time employee.

For example:

• A full-time employee working 38 ordinary hours per week accrues four weeks per year (152 hours).
• A part-time employee working 19 ordinary hours per week (0.5 of full-time) accrues 76 hours per year.

Casual employees are different. Casuals do not receive paid annual leave, and instead typically receive a higher hourly rate (casual loading) to compensate for leave and other entitlements they don’t get.

If you’re unsure about someone’s status, check their contract and actual working pattern. Correct classification drives the right entitlements and reduces underpayment risk. When in doubt, it’s worth reviewing your Employment Contract templates so they clearly set out the type of employment and the leave rules that apply.

How Does Annual Leave Accrue For Part-Time Workers?

Accrual Basics

Annual leave accrues progressively based on an employee’s ordinary hours of work (excluding overtime), and it accumulates from year to year if not taken. It doesn’t “expire”, but it must be paid out at the end of employment.

For part-time staff, the accrual rate is pro‑rata. If your full-time pattern is 38 hours per week, and a part-timer regularly works 19 hours, they’ll accrue half the leave a full-time employee accrues over the same period.

When Leave Is Taken

When a part-time employee takes annual leave, you pay them at their base rate of pay for the ordinary hours they would have worked during that period. If an applicable modern award or enterprise agreement provides for annual leave loading, you’ll also need to apply that loading when leave is taken. You can read more about how loading works in practice in this guide to annual leave loading.

Record-Keeping And Payslips

You must keep accurate records of hours worked, leave accrued and leave taken for at least seven years. While many employers choose to show leave balances on payslips for transparency, Australian law does not require you to display leave balances on payslips. That said, giving employees visibility over their balances is good practice and can reduce disputes.

Personal/Carer’s Leave (Sick Leave) – How It Differs

Personal/carer’s leave for permanent employees is a separate entitlement under the NES. It accrues progressively based on ordinary hours (not as calendar “days”), with a full-time employee accruing the equivalent of 10 days per year of service. Part-time employees accrue this entitlement on a pro‑rata basis according to their hours. Keep it tracked separately from annual leave and apply your policies consistently.

Employer Obligations: Records, Pay, Policies

Employers have several legal obligations when it comes to managing part-time annual leave. Building these into your processes will keep you on the right side of the Fair Work Act and help your team plan time off fairly.

• Accurate records: Maintain up-to-date records of each employee’s ordinary hours, leave accruals and leave taken. Keep these records for at least seven years.
• Correct pay when leave is taken: Pay annual leave at the employee’s base rate for ordinary hours they would have worked during the leave period. If an award or agreement applies leave loading, include it.
• Follow the right instrument: If your employees are covered by a modern award or enterprise agreement, those terms sit on top of the NES. Confirm any additional rules around leave, including notice requirements, shutdown directions, or loading. If you’re unsure, get assistance with award compliance.
• Clear contracts and policies: Your Employment Contract should explain annual leave entitlements and request/approval processes. Pair it with a practical Workplace Policy so your team knows how to apply for leave, how much notice is required, and how peak periods are managed.
• Termination payouts: On ending employment, pay out any untaken annual leave at the employee’s base rate (and include leave loading if the applicable award/EA requires it to be paid on payout). If you’re unsure what to include, this guide to calculating final pay can help you structure the process.

Applying these requirements consistently goes a long way toward preventing complaints or claims with the Fair Work Ombudsman.

Calculating And Paying Annual Leave: Step-By-Step

1) Confirm Ordinary Hours

Check the employee’s contract and rosters to confirm their ordinary hours of work. If hours vary seasonally, use the agreed pattern or a reasonable average according to your award or agreement.

2) Work Out The Accrual Rate

Annual leave accrues at four weeks per year of service, pro‑rata. In hours, a full-time pattern of 38 hours per week equates to 152 hours of annual leave per year (38 × 4). A part-time worker on 19 ordinary hours per week would therefore accrue 76 hours per year.

Accrual is usually tracked each pay period. Many payroll systems will calculate this automatically once you set the ordinary hours correctly.

3) Approve Leave And Pay Correctly

When leave is taken, pay the employee at their base rate for the ordinary hours they would have worked during the leave period. Apply any required leave loading if your award or agreement says so.

4) Update Balances And Records

Deduct the hours of leave taken from the employee’s balance and keep a clear audit trail (date of request, dates taken, hours paid, and who approved it). This helps with planning and protects your business if a dispute arises later.

5) Review Regularly

It’s good practice to review leave balances periodically and encourage employees to take leave so they can rest and recharge. Managing large balances proactively reduces financial liabilities and staffing bottlenecks during peak periods.

FAQs: Cashing Out, Refusing Leave, Shutdowns, Public Holidays

Can Part-Time Employees Cash Out Annual Leave?

Sometimes. Cashing out annual leave is tightly regulated and depends on whether an employee is covered by a modern award or enterprise agreement:

• Award or enterprise agreement covered: Cashing out is only allowed if the award/EA expressly permits it, and you must follow the conditions it sets (for example, a cap on the amount that can be cashed out in a 12‑month period, a written agreement for each cash-out, and ensuring the employee keeps at least four weeks remaining).
• Award/agreement-free employees: The Fair Work Act allows cashing out by a separate written agreement, provided the employee keeps a minimum of four weeks of accrued annual leave after cashing out and is paid at least their base rate for the hours being cashed out. You can’t pressure or coerce an employee to cash out leave.

Always document cashing out properly and store the agreement with your payroll records. For more detail on conditions and good practice, see this overview of cashing out annual leave.

Can I Refuse A Part-Time Employee’s Annual Leave Request?

You can refuse an annual leave request if the refusal is reasonable, taking into account your business needs and the employee’s circumstances. Think about peak trading periods, staffing levels, and any award/EA requirements around notice or replacement staffing.

If you need to refuse, explain your reasons and try to find alternative dates that work. Managing this transparently helps preserve trust and reduces the risk of disputes. There’s a short Q&A on when an employer can refuse annual leave that you may find useful to sense-check your approach.

Can I Direct A Part-Time Employee To Take Annual Leave (e.g. During A Shutdown)?

Possibly. Many businesses shut down over Christmas/New Year or during inventory periods. Whether you can direct an employee to take annual leave will depend on the NES, any applicable award or enterprise agreement, and the terms of your contracts and policies. Generally, you’ll need to provide reasonable notice and apply the direction fairly across comparable employees.

How Do Public Holidays Work For Part-Time Employees?

If a public holiday falls on a day the part-time employee would ordinarily work, they are entitled to be absent and be paid their base rate for those ordinary hours (subject to any applicable award/EA rules). If they don’t ordinarily work that day, there’s no entitlement to payment for the public holiday.

What About Personal/Carer’s Leave And Parental Leave?

Personal/carer’s leave accrues progressively (pro‑rata for part-time) and is separate from annual leave. Parental leave is generally an unpaid entitlement and has service period requirements. It’s a good idea to cover these in your policies so everyone understands how to request and provide evidence where required.

Do I Have To Show Leave Balances On Payslips?

No. While many employers include leave balances on payslips as a transparency measure, it’s not a legal requirement to display them. You do, however, need to keep accurate leave records and provide them on request in line with workplace laws.

Common Mistakes To Avoid

• Misclassifying workers: Casuals don’t accrue paid annual leave. Mixing up casual and part-time status can lead to underpayment issues (and backpay).
• Not checking the applicable instrument: Awards and enterprise agreements often set extra rules on accrual, loading, shut-downs and cashing out. Always confirm which instrument applies before making policy decisions.
• Inconsistent approvals: Approve or refuse leave requests in a consistent, well-documented way. Inconsistency can create perceptions of unfairness and fuel grievances.
• Poor documentation: Missing records make it hard to prove compliance. Keep copies of approvals, cash-out agreements, and rosters that show ordinary hours.
• Incorrect termination payouts: Failing to pay out accrued annual leave correctly at the end of employment can result in claims. Double-check the payout math and, if relevant, whether your award/EA requires loading on payout.

If your leave settings aren’t working smoothly, consider tightening your Workplace Policy and updating any Employment Contract clauses so they align with the award/EA and the NES. Where you’ve changed patterns of work over time, it can also be prudent to formalise any variations, and if needed, get advice before changing employment contracts.

Key Takeaways

• Permanent part-time employees in Australia are entitled to paid annual leave under the NES, accrued on a pro‑rata basis according to ordinary hours worked.
• Pay annual leave at the employee’s base rate for the ordinary hours they would have worked, and apply annual leave loading if required by an award or enterprise agreement.
• Keep accurate records of hours, accruals and leave taken. Showing leave balances on payslips is optional (but helpful), not a legal requirement.
• Cashing out annual leave is only allowed under strict rules. Follow the instrument (award/EA) if one applies, or the award‑free rules in the Fair Work Act, and always use a written agreement. See more on cashing out annual leave.
• On termination, pay out all accrued but unused annual leave correctly. If you’re unsure what to include, check your award/EA and this guide to calculating final pay.
• Clear, consistent processes in your Employment Contract and Workplace Policy make leave management easier and help you avoid disputes.

If you’d like a consultation on holiday pay for part-time employees (or any employment law question in your business), you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.