How To Create A Leave Policy For Your Australian Business

If you’re running a business in Australia, one of the most practical ways to support your people and protect your business is to put a clear, compliant leave policy in place.

Whether you have a small team or you’re growing fast, a well-drafted leave policy sets expectations, helps you meet your legal obligations, and gives your employees confidence in how leave is requested, approved and recorded.

In this guide, we’ll step through what your leave policy should cover under Australian law, how to write it, and how to keep it up to date as your business evolves.

What Is A Leave Policy And Why Does It Matter?

A leave policy is a written document that explains the leave rights and processes in your business. It sets out who is entitled to what, the rules for applying, when evidence is required, and who approves requests.

Beyond compliance, a leave policy delivers day-to-day benefits:

• Legal compliance: Australian law (including the National Employment Standards in the Fair Work Act) sets minimum leave entitlements. A policy helps you apply these consistently.
• Clarity for everyone: Employees know how to request leave and what to expect; managers know how to assess requests fairly.
• Consistency and fairness: A documented process reduces the risk of misunderstandings or claims of unfair treatment.
• Business continuity: Having a clear system makes scheduling, rostering and planning for absences much easier.

You’re not legally required to have a written leave policy, but it’s strongly recommended. It provides one source of truth across your team and demonstrates you’re meeting your obligations.

What Leave Must Your Policy Cover Under Australian Law?

The National Employment Standards (NES) set the minimum leave entitlements for most employees in Australia. Your policy must cover at least the following types of leave (and you can always offer more generous benefits if you wish):

• Annual leave: At least four weeks of paid annual leave per year for full-time employees (pro‑rata for part‑time). Some shift workers are entitled to five weeks. Your policy should cover accrual, requests, and whether you permit cashing out annual leave.
• Personal/carer’s leave: 10 days of paid personal/carer’s leave per year for full‑time employees (pro‑rata for part‑time), which covers sick leave and caring responsibilities. Casuals are not entitled to paid personal/carer’s leave but can access two days of unpaid carer’s leave per permissible occasion. Your policy should also address reasonable evidence requirements; for example, you can link your approach to when employers can request medical certificates.
• Compassionate leave: Two days per permissible occasion (for example, the death of, or life‑threatening illness or injury to, a member of the employee’s immediate family or household, or in the case of miscarriage or stillbirth). This leave is paid for non‑casuals and unpaid for casuals.
• Parental leave: Up to 12 months unpaid parental leave, with a right to request an additional 12 months (for eligible employees). Your policy can also explain how you handle keeping-in-touch days and any employer‑funded paid parental leave you choose to offer (separate from the government Paid Parental Leave scheme).
• Family and domestic violence (FDV) leave: 10 days of paid FDV leave each year for all employees (including casuals). This entitlement renews annually on the employee’s work anniversary and does not accumulate. Your policy must emphasise confidentiality (for example, not identifying FDV leave on payslips) and set out acceptable evidence in a sensitive way.
• Community service leave: Unpaid leave for eligible voluntary emergency management activities. For jury service, full‑time and part‑time employees are entitled to “make‑up pay” for the first 10 days (the difference between jury pay and their base rate); casuals are not entitled to paid time for jury service under the NES.
• Long service leave: Entitlements vary by state and territory (and sometimes by award). Your policy should state which state/territory rules apply and how you’ll manage accrual and requests.
• Public holidays: Employees are entitled to be absent on a public holiday and be paid if they would ordinarily work that day. You can request employees work on a public holiday if the request is reasonable, and they can refuse if the refusal is reasonable.

Many employers also offer extra paid or unpaid leave, such as study leave, birthday leave, mental health days or cultural leave. If you add these, be clear they are above the minimum legal entitlements.

Step-By-Step: How To Create A Leave Policy

Creating your policy is easier if you break it into clear steps. Use the checklist below as your roadmap.

1) Confirm Who The Policy Covers

• Identify which categories of workers are in scope (full‑time, part‑time, casuals, apprentices and trainees).
• Note any contractors (who are not employees) and confirm they are not covered by employee leave entitlements.

2) Map Your Legal Baseline

• List the leave types required by the NES as they apply to your workforce.
• Check if any modern awards or enterprise agreements apply. These instruments can add conditions (for example, additional annual leave for certain shift workers or specific shutdown rules).
• Record state or territory long service leave rules relevant to your employees.

3) Decide On Any Extra Benefits

• Consider whether you’ll offer extra paid parental leave, extra compassionate leave, study leave, or wellbeing days.
• Decide if you’ll allow purchased leave or “leave without pay” in specific circumstances; your rules should align with how you handle leave without pay.

4) Set Your Requests And Approvals Process

• Explain how to request leave (for example, via your HR system or in writing), minimum notice periods and who approves requests (manager, HR or both).
• State what you will accept as reasonable evidence and when it’s required, such as medical certificates for personal/carer’s leave or FDV leave (noting you will only request evidence that is reasonably necessary, with privacy safeguarded).
• Describe how you will manage competing requests, peak periods or blackout dates (for example, you may restrict annual leave during your busiest season provided you still apply the NES fairly).

5) Explain Accruals, Carryover And Payouts

• Clarify how annual leave accrues and whether you permit carrying over balances year to year.
• Set rules around “cashing out” annual leave (if you allow it, ensure the conditions meet the NES and any applicable award requirements).
• State whether accrued but unused annual leave is paid out on termination in line with the law and any applicable industrial instrument.

6) Address Public Holidays And Shutdowns

• List the public holidays you observe and how you treat employees rostered to work on those days (including rates of pay if relevant to an award or agreement).
• Explain your approach to annual shutdowns (for example, over Christmas/New Year) and how leave is managed for employees without sufficient accruals, where permitted by an applicable award or agreement.

7) Include FDV Leave Settings And Confidentiality

• Confirm all employees (including casuals) can access 10 days paid FDV leave each year.
• State that requests will be managed confidentially, that payslips will not disclose FDV leave, and that only limited, necessary information will be collected.

8) Explain Record-Keeping And Communication

• Outline how leave balances are tracked and how often employees can check them.
• Tell staff where to find the policy (for example, your intranet or staff handbook) and how updates will be communicated.

9) Review Regularly

• Schedule an annual review to reflect changes to the law, your award coverage or your operational needs.
• Train managers on the policy so approvals are consistent across the business.

Laws, Awards And Record-Keeping You Need To Follow

Your leave policy must align with Australia’s workplace laws and any applicable industrial instruments. Key touchpoints include:

• Fair Work Act 2009 (Cth) and the NES: These set the minimum entitlements for annual leave, personal/carer’s leave, compassionate leave, parental leave, FDV leave, community service leave, public holidays and notice of termination. You can’t provide less than the NES.
• Modern awards and enterprise agreements: These may add entitlements or procedures (such as extra leave for certain shift workers, rules for shutdowns or roster changes). Your policy should reflect any specific rules that apply in your industry.
• Long service leave legislation: State/territory laws apply differently across jurisdictions. Make sure your policy identifies which rules you apply for each employee.
• Anti-discrimination and equal opportunity laws: Policies and decisions should not disadvantage employees because of protected attributes (for example, pregnancy, family responsibilities or disability). That includes fair access to parental leave and flexible work.
• Record-keeping and payslips: Employers must keep accurate time and wages records and provide compliant payslips. Be particularly careful not to identify FDV leave on payslips for privacy and safety reasons.

If your team works to rosters, it’s also sensible to align your policy with your broader approach to rostering and notifications. For example, set expectations in line with any legal requirements for employee rostering in your industry and awards.

Which Documents And Policies Sit Alongside Your Leave Policy?

A leave policy works best as part of a simple, joined‑up set of documents. Consider how it fits with:

• Employment Contract: Sets the employment terms for each employee, including leave entitlements, award coverage and any specific conditions like probation or set hours.
• Workplace Policy or Staff Handbook: Brings your key policies together (leave, conduct, WHS, grievances) in one accessible place.
• Privacy Policy: Explains how you collect and handle employee information and sensitive evidence (for example, medical certificates or FDV leave evidence) in line with privacy obligations.
• Parental leave and flexible work procedures: You can include these within your leave policy or as stand‑alone procedures to support employees and managers during longer absences.
• Manager guidance: A short internal guide for managers can help ensure consistent decisions, especially around evidence requirements and responding to urgent requests.

It’s also useful to make clear how your leave policy interacts with payroll processes, including how leave is recorded, who to contact for corrections and when balances are updated.

Key Takeaways

• Every Australian business benefits from a clear, written leave policy that aligns with the National Employment Standards and any applicable awards or agreements.
• Your policy should cover annual leave, personal/carer’s leave, compassionate leave, parental leave, community service leave, public holidays, long service leave and paid FDV leave for all employees, including casuals.
• Set out practical rules for requests, notice, evidence, accruals, carryover, cashing out, shutdowns and confidentiality (especially for FDV leave) so managers can apply the policy consistently.
• Keep your policy current by reviewing it annually and training managers; make sure it sits neatly alongside your Employment Contract, Workplace Policy and Privacy Policy.
• Where you allow discretionary leave (such as leave without pay), align your rules with your operations and apply them fairly, drawing on resources like Sprintlaw’s guide to leave without pay rules.
• Getting tailored legal input early can help you avoid disputes, ensure compliance and set a positive culture around time off.

If you’d like a consultation to help you create or review a leave policy for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.