How To Calculate Personal Leave Under Australian Employment Law

Managing leave correctly is one of those “small” admin tasks that can quietly turn into a big risk for a growing business.

If you have employees (or you’re about to hire your first one), knowing how to calculate personal leave in Australia is essential for staying compliant, paying people correctly, and avoiding disputes when someone’s sick or injured.

The tricky part is that personal leave (often called sick leave) isn’t just a single number you set and forget. It depends on employment type, hours worked, ordinary hours, pay cycles, and what your payroll system is actually counting. And if you’re offering flexible arrangements (common in startups), that can add another layer.

In this guide, we’ll walk through how personal leave accrues, how to calculate it for common work patterns, and the practical payroll steps you can implement so you’re not scrambling when an employee needs time off.

What Counts As Personal Leave (And Who Gets It)?

Under Australia’s National Employment Standards (NES), eligible employees get paid personal/carer’s leave. This is the leave employees can use if they are:

• unwell or injured (personal leave), or
• caring for an immediate family or household member who is unwell, injured, or in an emergency (carer’s leave).

As an employer, it helps to think of personal leave as a paid leave balance that:

• builds up (“accrues”) over time, and
• can be taken when a qualifying reason applies.

Which Employees Accrue Paid Personal Leave?

• Full-time employees: yes
• Part-time employees: yes (pro-rata based on ordinary hours)
• Casual employees: generally no paid personal leave under the NES (they may have access to unpaid carer’s leave in some circumstances)

If you’re hiring, it’s worth getting your engagement right from day one, including clear terms about hours and leave in your Employment Contract. Personal leave calculations are much easier when “ordinary hours of work” are properly documented.

How Personal Leave Accrues Under The NES (The Rule You Should Build Around)

The NES provides that full-time employees accrue 10 days of paid personal/carer’s leave per year.

However, for payroll and compliance purposes, the more accurate way to think about it is:

• personal leave accrues progressively during the year, and
• it accrues based on the employee’s ordinary hours of work (not simply “10 days” as a flat number).

This matters because a “day” can mean different hours for different employees. For example:

• A full-time employee working 7.6 hours/day (38 hours/week) has a “day” of personal leave that is typically 7.6 hours.
• A part-time employee working 3 days/week at 6 hours/day has a “day” that is 6 hours.

So, when you’re working out personal leave calculations, the safest and most consistent approach is to calculate it in hours.

The Practical Accrual Formula (In Hours)

A common approach is:

Annual personal leave entitlement (hours) = ordinary weekly hours × 2

Why “× 2”? Because 10 days per year is often treated as 2 weeks of an employee’s ordinary hours.

Examples:

• Full-time (38 hours/week): 38 × 2 = 76 hours per year
• Part-time (20 hours/week): 20 × 2 = 40 hours per year

Then you accrue that progressively across the year (often per pay cycle).

How To Calculate Personal Leave Accrual (Step-By-Step Examples)

Most small businesses want something they can apply immediately in payroll. Here are practical methods and examples you can use.

Step 1: Confirm The Employee’s Ordinary Hours

Start with the employee’s “ordinary hours” (what they are engaged to work, excluding overtime). This should come from:

• the employment contract, and/or
• the applicable Modern Award or enterprise agreement (if one applies).

If you’re unsure about award coverage or pay conditions, it’s worth checking early, because leave and pay entitlements often sit alongside other obligations like breaks and rostering (for example, Fair Work breaks rules can affect how you structure ordinary hours in practice).

Step 2: Convert 10 Days Into Hours

Use the annual hours rule:

Annual personal leave (hours) = ordinary weekly hours × 2

Example A: Full-time employee working 38 hours/week

• Annual entitlement: 38 × 2 = 76 hours

Example B: Part-time employee working 24 hours/week

• Annual entitlement: 24 × 2 = 48 hours

Step 3: Work Out The Accrual Per Pay Period

Then accrue progressively. The simplest method is to divide the annual entitlement by the number of pay periods.

Accrual per pay period (hours) = annual entitlement (hours) ÷ number of pay periods in the year

Example A (Fortnightly pay): Full-time 38 hours/week

• Annual entitlement: 76 hours
• Pay periods: 26
• Accrual per fortnight: 76 ÷ 26 = 2.923 hours

Example B (Weekly pay): Part-time 24 hours/week

• Annual entitlement: 48 hours
• Pay periods: 52
• Accrual per week: 48 ÷ 52 = 0.923 hours

Most payroll systems will track this automatically if the ordinary hours and leave category are set up correctly, but you still need to understand the maths so you can spot issues early (especially when someone changes from full-time to part-time, or their days/hours shift).

Step 4: Deduct Leave Taken In Hours (Based On What They Were Rostered)

When an employee takes personal leave, deduct the hours they would have worked (their ordinary rostered hours for that day).

For example, if a part-time employee is rostered for 6 hours on Tuesdays and takes personal leave on a Tuesday, you deduct 6 hours (not “1 day”).

This is where clear rostering practices matter. If you frequently change rosters, you should ensure you’re meeting any notice and consultation obligations that apply (and keeping good records). Depending on your workforce, you may also want a written shift cancellation policy so leave, cancellations and changes don’t become messy (or inconsistent) across the team.

Common Personal Leave Scenarios Employers Need To Handle

Knowing the formula is one thing. In real workplaces, personal leave questions often come up in specific situations. Here are the ones we see most often for small businesses and startups.

Part-Time Employees With Fixed Days

If a part-time employee works fixed ordinary hours (for example, Monday to Wednesday, 9am–3pm), personal leave accrues based on their ordinary weekly hours, and leave is deducted based on their rostered hours.

Key takeaway: treat everything as hours, and the calculation stays consistent.

Changing Hours (For Example, Scaling Up Or Down)

Startups commonly adjust working patterns as the business grows (or as funding cycles change).

If an employee’s ordinary hours change, you generally need to ensure:

• their contract is updated (or you have a written variation),
• your payroll settings reflect the new ordinary hours for accrual going forward, and
• their existing accrued balance is handled correctly (this is where payroll mistakes often happen).

Even beyond leave, changing hours can have broader compliance implications. If you’re considering reducing hours, you’ll want to think through the employment law risks and process (including consultation obligations where relevant), similar to what’s discussed in reducing employee hours.

Personal Leave During A Notice Period

It’s common for an employee to take personal leave during their notice period, especially if they’re unwell or stressed.

From an employer perspective, your key considerations usually are:

• is the employee genuinely unfit for work and able to provide evidence if requested?
• are you deducting the correct number of hours?
• are you applying your policy consistently?

If you’re navigating this scenario, it helps to understand the compliance expectations around sick leave during the notice period, because errors here can lead to final pay disputes.

Evidence: Medical Certificates And Statutory Declarations

Employers can generally request evidence that would satisfy a reasonable person that the employee is entitled to personal leave (for example, a medical certificate or a statutory declaration).

To avoid confusion and friction, make sure your workplace policy clearly explains:

• when evidence is required (noting this can depend on your policy and any applicable award or agreement),
• what types of evidence you accept, and
• when it needs to be provided.

When employees don’t have immediate access to a doctor, a statutory declaration may be an option in some cases, and you might see employees asking about statutory declarations for sick leave. The most important thing is to apply a fair and consistent approach, aligned with workplace laws and any applicable award terms.

Practical Payroll Tips To Avoid Personal Leave Mistakes

Most personal leave issues we see aren’t caused by bad intentions. They usually come from inconsistent practices or payroll settings that don’t match the employee’s actual ordinary hours.

Here are some practical tips you can implement quickly.

Track Leave In Hours, Not Days

Even if your payslips display “days,” the back-end calculation should be based on hours.

This helps when you have:

• part-time employees working different length shifts,
• compressed weeks, or
• employees whose hours change over time.

Make “Ordinary Hours” Clear In Writing

Your leave accrual depends on ordinary hours, so make sure you can point to where those hours are set out.

For many small businesses, this comes down to having:

• a clear employment contract, and
• a simple written roster process (even if you’re flexible).

Have A Written Policy For Leave Requests And Evidence

A short policy can prevent misunderstandings about:

• how to notify you they’re taking personal leave,
• what evidence is required (including any award-specific rules), and
• how quickly evidence must be provided.

Set A Process For Auditing Leave Balances

At least quarterly (and ideally before the end of the financial year), do a quick check:

• Do the accrual rates match current ordinary hours?
• Are balances going negative unexpectedly?
• Are leave deductions reflecting actual rostered hours?

This is especially important after:

• promotions or role changes,
• changes to part-time days,
• return-to-work arrangements, or
• switching payroll providers.

Key Takeaways

• For most businesses, the simplest and safest way to calculate personal leave is to track it in hours, based on an employee’s ordinary hours of work.
• Full-time employees generally accrue the equivalent of 10 days of paid personal/carer’s leave per year, which is commonly treated as 2 weeks of ordinary hours (e.g. 76 hours for a 38-hour week).
• Part-time employees accrue personal leave on a pro-rata basis, and leave should be deducted according to the hours they were rostered to work.
• Accrual should happen progressively (usually per pay cycle), so your payroll settings and ordinary hours records need to align to avoid underpayments or disputes.
• Common risk areas include changing hours, personal leave during notice periods, and inconsistent evidence requirements - clear contracts and policies make this much easier to manage.

This article is general information only and isn’t legal advice. Because awards, enterprise agreements and individual arrangements can change your obligations, consider getting advice for your specific situation.

If you’d like help setting up employment contracts and policies that make leave accrual and compliance simple as you grow, contact Sprintlaw on 1800 730 617 or email team@sprintlaw.com.au for a free, no-obligations chat.