Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Managing employee leave touches almost every part of your business - from rostering and payroll to culture and compliance.
Get it right and you’ll support your team while staying on the right side of the law. Get it wrong and you risk underpayments, disputes and penalties.
In this guide, we’ll break down the key types of leave under Australian law, what they mean for you as an employer, and practical steps to manage leave requests with confidence.
What Counts As Leave Under Australian Law?
In Australia, minimum leave entitlements largely come from the National Employment Standards (NES) in the Fair Work Act 2009, plus any applicable modern award or enterprise agreement. Where an award or enterprise agreement applies, it can add extra rules on top of the NES, so always check the industrial instrument covering your employees.
At a high level, most employers will deal with:
- Annual leave (paid for permanent employees)
- Personal/carer’s leave (sick leave), unpaid carer’s leave and compassionate leave
- Parental leave (and related entitlements)
- Long service leave (state/territory legislation)
- Family and domestic violence leave
- Community service leave (including jury service)
- Public holidays
There are also workplace practices that interact with leave - like time off in lieu (TOIL), shut-downs, stand downs and unpaid leave by agreement.
Finally, casual employees have different entitlements. Casuals don’t accrue paid annual leave or paid personal/carer’s leave, but they do have access to certain unpaid leave, community service leave, public holiday rights and paid family and domestic violence leave (more on that below). Casuals also receive a casual loading in place of some paid entitlements.
Annual Leave: Accrual, Requests And Payroll Basics
Annual leave is paid time off for permanent employees, designed to support rest and work-life balance. Getting accruals, approvals and payouts right is essential to avoid underpayments.
Accrual And Balances
- Full-time employees accrue 4 weeks per year of service (pro rata for part-time employees).
- Some shiftworkers covered by particular awards may be entitled to 5 weeks.
- Accrual happens progressively based on ordinary hours and continues while an employee is on paid leave.
Part-time staff accrue at the same rate, proportional to their ordinary hours - the mechanics are explained in this guide on annual leave for part-time employees.
Requests, Reasonableness And Direction
Employees can request annual leave for times agreed with you. You may refuse a request on reasonable business grounds (for example, during a peak trading period), but decisions should be fair and consistent.
In some cases, you can direct an employee to take annual leave (e.g. where an excessive balance has accrued or during a shut-down) - but only if the applicable award or enterprise agreement allows it and your direction is reasonable.
Annual Leave Loading
Some awards provide for annual leave loading (commonly 17.5%). If an award applies to your employees, ensure your payroll handles annual leave loading correctly when leave is taken, and consider what the instrument says about paying loading on termination (see “Leave On Termination” below).
Cashing Out Annual Leave
Cashing out is permitted in limited circumstances. Generally, the award or enterprise agreement must allow cashing out, there must be a separate written agreement each time, the employee must keep a minimum balance, and they must receive at least what they would have been paid if they took the leave. The rules are outlined in this overview of cashing out annual leave.
Personal/Carer’s Leave And Compassionate Leave
Personal/carer’s leave supports employees who are unwell or need to care for an immediate family or household member who is ill or affected by an unexpected emergency. Compassionate leave covers serious matters like the death of a family or household member, or life-threatening illness or injury.
Entitlements At A Glance
- Personal/carer’s leave for permanent employees: 10 days of paid leave per year (pro rata for part-time), accruing progressively based on ordinary hours.
- Unpaid carer’s leave: 2 days per permissible occasion if paid personal/carer’s leave isn’t available (available to all employees, including casuals).
- Compassionate leave: 2 days per permissible occasion (paid for permanent employees and unpaid for casuals).
For a practical overview of eligibility, evidence and notice, see this guide to sick leave entitlements.
Evidence Requirements
You can ask for reasonable evidence if an employee takes personal/carer’s leave - for example, a medical certificate or statutory declaration. Your policy should set clear expectations and be applied consistently. For timing and what’s considered “reasonable”, this explainer on requesting medical certificates is a useful reference.
Managing Recurring Or Extended Absences
Where absences become frequent or extended, follow a fair process. Consider return-to-work discussions, reasonable adjustments (if relevant) and ensure any performance or capacity issues are handled under your policies and the applicable award or agreement.
Parental Leave And Related Entitlements
Parental leave is a core NES entitlement. Eligible employees who have completed at least 12 months of continuous service can access up to 12 months of unpaid parental leave, with a right to request a further 12 months (which can be refused on reasonable business grounds).
Key Concepts
- Eligibility: Generally, 12 months’ continuous service immediately before the expected date of birth or adoption placement. Different rules can apply to casuals who are long term and have reasonable expectation of continuing employment.
- Type: Unpaid leave under the NES (separate to any government-funded paid parental leave schemes).
- Notice: Employees must give written notice, including evidence if requested, with at least 10 weeks’ notice of the intended start date and a confirmation at least 4 weeks before starting.
- Return to work: Employees have a right to return to their pre-parental leave position or, if that no longer exists, an available position nearest in status and pay.
A clear, inclusive Parental Leave Policy helps everyone understand notice requirements, keeping-in-touch days and how you’ll handle flexible work requests around family needs.
Don’t forget other related entitlements, such as special maternity leave and partner leave (sometimes called “supporting partner” or “spouse/partner” leave). Awards and enterprise agreements may add to the NES minimums, so check what applies to your team.
Other Leave Types Employers Should Know
Beyond the big three above, several other leave types regularly come up. Here’s what you need to know - and where the rules can catch employers out.
Family And Domestic Violence Leave
Under the NES, all employees - including casuals - can access 10 days of paid family and domestic violence leave in each 12‑month period. It’s paid at the employee’s full rate for the hours they would have worked if they weren’t on leave.
Privacy matters here. Ensure payroll and record-keeping are set up to keep this leave confidential and that payslips don’t disclose sensitive information.
Long Service Leave
Long service leave is governed by state and territory legislation (and some pre-modern awards), and the rules differ across jurisdictions. Typical issues include when entitlements start to accrue, how they’re calculated, and when pro rata payouts are required on termination. If you operate across multiple locations, reflect the differences in your policy and payroll settings.
Community Service Leave (Including Jury Service)
Community service leave covers certain emergency service activities and jury service. For jury service, the NES requires you to pay “make-up pay” for the first 10 days - that is, you pay the difference between the employee’s base pay for their ordinary hours and any jury service attendance fees they receive (excluding expense allowances).
Keep records of summons and attendance, and check any relevant award or state law for additional obligations.
Public Holidays
Employees are entitled to be absent from work on a public holiday. You can request that an employee work on a public holiday if the request is reasonable, and the employee may refuse on reasonable grounds. If they do work, pay the correct penalty rates under the applicable award or enterprise agreement.
Unpaid Leave By Agreement
Employees sometimes ask for a period of unpaid leave outside the NES minimums. You can agree to this - just be clear about how it affects leave accruals and service continuity. This primer on unpaid leave covers the fundamentals to keep in mind.
Study Leave
Study leave isn’t an NES entitlement, but it might be provided under an award, enterprise agreement or a company policy. If you encourage training and professional development, set expectations in writing so leave approvals and pay questions are straightforward.
Time Off In Lieu (TOIL)
TOIL lets employees take paid time off instead of receiving overtime. This is only lawful if permitted by the relevant award or enterprise agreement and if you follow those rules precisely (e.g. written agreement, time frames for taking the TOIL, and how it’s valued). Make sure your policy aligns with the instrument and that payroll can track it properly - here’s a quick refresher on time off in lieu.
Shut-Downs And Stand Downs
Some awards allow you to direct employees to take annual leave during a shut-down (e.g. over Christmas), but there are strict notice and balance rules. Stand down (due to a stoppage of work beyond your control) is separate and narrowly defined in the Fair Work Act - get advice before implementing either.
Managing Leave Well: Policies, Evidence, Payroll And Termination
Strong systems take the stress out of leave. Here are the key building blocks to have in place.
Clear Policies And Contracts
- Set rules for requesting leave, evidence requirements and approval time frames in your employment contracts and policies.
- Explain when employees may be directed to take leave (e.g. during shut-downs or when balances are excessive) if allowed by the award or agreement.
- Use consistent, fair processes and apply policies sensitively, especially for compassionate and family and domestic violence leave.
Reasonable Notice And Evidence
For most leave types, you can require timely notice and reasonable evidence. For personal/carer’s leave, consider a short, practical policy that aligns with your operational needs and the “reasonableness” standard set by Fair Work - this resource on requesting medical certificates will help you calibrate your approach.
Payroll And Record-Keeping Essentials
- Configure your payroll to accrue, pay and report leave correctly (including annual leave loading where applicable under an award).
- Maintain accurate records of leave balances, requests, approvals, evidence and payments.
- Be careful when employees move between full-time, part-time and casual - accruals and entitlements change with status.
Leave While On Probation Or During Notice Periods
Employees may take leave during probation or a notice period if they are entitled and it’s approved, but check how it interacts with your rosters and any award rules. If an employee is sick during a notice period, handle it consistently with your policies and the NES.
Leave On Termination
- Annual leave must be paid out in full on termination at the employee’s base rate for their ordinary hours. Some awards or agreements also require leave loading to be paid on termination - check the instrument that applies.
- Unused paid personal/carer’s leave is not paid out under the NES (unless an award or agreement says otherwise).
- Long service leave payout depends on the relevant state or territory law, including any pro rata rules.
Practical Tips To Reduce Disputes
- Encourage early leave planning so holiday periods and peak trading times are covered.
- Monitor leave balances to avoid large accruals that create liability and resourcing issues.
- Use a consistent approval framework and explain decisions plainly - it builds trust, even when you have to refuse a request for reasonable business grounds.
- Where patterns of absence emerge, meet early, offer support and document the steps you’re taking.
Key Takeaways
- The NES sets minimum leave entitlements (annual leave, personal/carer’s leave, parental leave and more), and awards or enterprise agreements can add extra conditions you must follow.
- Annual leave accrues for permanent employees; manage requests fairly, configure payroll for any award-based loading, and follow strict rules if cashing out is requested.
- Personal/carer’s leave requires timely notice and reasonable evidence - align your policy with the standard for requesting medical certificates.
- Eligible employees can take up to 12 months’ unpaid parental leave (with a right to request another 12); a clear Parental Leave Policy keeps the process smooth and consistent.
- Community service leave includes paid jury service make‑up pay for up to 10 days, and family and domestic violence leave is 10 days paid for all employees, including casuals.
- Other practices like TOIL and unpaid leave must mirror the award or agreement and be tracked properly to avoid underpayments.
- Accurate records, clear policies and consistent decision-making are your best defence against disputes and compliance risks.
If you’d like a consultation on setting up or reviewing your employee leave policies and processes, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
