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Managing employee leave is a cornerstone of good business operations, and in Australia, getting personal leave accrual right is not just a nice-to-have – it’s a legal necessity. Whether you’re growing your first small business or leading a large team, understanding personal leave (also called sick leave or carer’s leave) will help you meet your obligations, support your staff, and avoid costly disputes.
In this guide, we break down the rules around personal leave accrual: how it builds up, what the law says, how to calculate it, and the pitfalls to avoid. If you want peace of mind that your business is compliant and supportive, keep reading. We’re here to help you get it right from day one.
What Is Personal Leave?
Personal leave is one of the minimum entitlements all employees (except casuals) are granted under the National Employment Standards (NES). It covers two scenarios:
- Sick leave: When an employee is unfit to work because of their own illness or injury.
- Carer’s leave: When an employee needs to care for a member of their immediate family or household due to illness, injury, or an emergency.
Under the NES, full-time and part-time employees are entitled to paid personal leave that accrues throughout the year. But does personal leave accrue in the same way for all employees, and how do you ensure you’re calculating it correctly? Let’s dig into the details.
Does Personal Leave Accrue For All Employees?
Personal leave is a paid entitlement for both full-time and part-time employees. Casual employees are not entitled to paid personal leave, as their hourly pay typically includes a casual loading that covers such entitlements.
- Full-time employees: Accrue personal leave based on their ordinary hours of work (usually a 38-hour week).
- Part-time employees: Also accrue personal leave, but proportionate to their ordinary hours of work (e.g., if working 19 hours a week, they’ll accrue half as much personal leave as a full-timer).
- Casual employees: Do not accrue paid personal leave, but may access unpaid carer’s leave in some circumstances.
If you employ staff on a fixed-term, part-time, or flexible basis, it’s important to understand how these rules affect their entitlements. For more on part-time employment and leave, check out our detailed guide.
How Does Personal Leave Accrual Work?
Personal leave accrual isn’t just a yearly lump sum. It builds up progressively during employment, meaning staff earn (accrue) leave over time as they work.
Accrual Rate For Personal Leave
The minimum entitlement under the National Employment Standards is:
- 10 days of paid personal leave per year for full-time employees
- Pro-rata for part-time employees, based on their ordinary hours of work
But what does “10 days” actually mean? In 2019, the High Court clarified that a “day” of personal leave means the portion of a 24-hour period that an employee would have worked – not a set number of hours for everyone. So, if someone works different shifts (e.g., 8 hours some days, 4 hours on others), you need to pro-rate their personal leave entitlement based on those hours.
For most full-time (38-hour week) employees, leave accrues at:
- 1/26th of ordinary hours worked
This accrual formula is embedded in the NES. For example, if an employee works 38 hours per week, over a year (52 weeks), that’s 38 x 52 = 1976 hours. 10 days is 76 hours (10 x 7.6 hours, since a “day” for a standard full-timer is 7.6 hours). 76/1976 = 1/26.
How Is Personal Leave Calculated In Practice?
Personal leave accrual is managed in hours rather than days to keep things fair for staff with different rosters or patterns of work. Here’s how to calculate it:
- Start with the employee’s ordinary hours of work per week.
- Personal leave accrues at 1/26th of those ordinary hours for each week worked.
- Personal leave accumulates year to year and is not reset each year (i.e., unused leave carries over to the next year).
- When an employee takes personal leave, subtract the hours taken from their accrued balance.
For part-timers, just work out the same calculation based on their average weekly hours.
Here’s an example:
Jenny works 30 ordinary hours per week as a part-timer. Each week, she accrues:
- 30 hours ÷ 26 = 1.154 hours of personal leave each week
Over a year (52 weeks), she accrues:
- 1.154 x 52 = 60 hours of personal leave (which is 10 days of 6-hour shifts, matching her standard rostered day).
For a more detailed calculator, the Fair Work Ombudsman and payroll software often offer accrual guides or calculators, but knowing the basic formula will help you check compliance.
When Does Personal Leave Accrue?
Personal leave begins accruing from the first day of employment and continues while the employee is working, including when they are on paid leave (like annual leave or public holidays).
However, personal leave does not accrue during unpaid leave (for example, unpaid parental leave). The accrual stops and then picks up again when the employee resumes paid work.
Does Personal Leave Accrual Expire?
No. Unused personal leave accumulates from year to year and does not “expire” or reset, as is the case with some other leave entitlements. If your employee has not used their personal leave, it simply stays in their balance. This accumulates until it is used or the employment ends.
Note that personal leave is not paid out when an employee resigns or is terminated, unless your modern award, enterprise agreement, or employment contract specifically says so (which is rare). This is different from annual leave, which is usually paid out on termination.
Are There Any Exceptions Under Awards or Enterprise Agreements?
Some modern awards, enterprise agreements, or individual contracts may provide for extra personal leave entitlements over and above the NES. However, you cannot give less than the minimum standard.
Always check your employee’s relevant award or agreement for any extra provisions – for example, more generous leave accrual, notice requirements, or evidence demands. For more tips, see our guide on Award Wages and Compliance.
Do I Need to Provide Evidence for Personal Leave?
As an employer, you can request evidence (such as a medical certificate or statutory declaration) that is reasonable in the circumstances before paying personal leave. Your workplace policy should make clear what type of evidence you require and how staff can provide it.
Having a clear workplace policy on personal leave helps manage expectations and keeps things transparent – for both you and your team.
Common Mistakes With Personal Leave Accrual (And How To Avoid Them)
Getting personal leave wrong is one of the most common mistakes small businesses make. Here are some pitfalls:
- Accruing leave in days rather than hours, resulting in confusion for shift workers.
- Not pro-rating leave for part-time staff, or miscalculating for varied rosters.
- Failing to track leave properly in payroll systems, leading to under- or over-accrual.
- Denying leave requests without reasonable cause, risking claims of unfair treatment or breach of the Fair Work Act.
It’s smart practice to review your contracts and workplace policies regularly and ensure your payroll software is set up correctly or to speak with a legal expert in employment law to audit your compliance.
What Legal Documents Should I Have for Personal Leave?
To manage personal leave accrual and entitlements correctly, consider having the following:
- Employment Agreement: Sets out personal leave entitlements and requirements for providing notice and evidence.
- Workplace Leave Policy: Explains processes for applying for leave, evidence standards, and how leave accrues and is recorded.
- Staff Handbook: Provides employees a reference for all workplace policies, including sick and carer’s leave.
- Payroll Records: Accurate, legally compliant record-keeping to show leave accruals and balances (required by law).
- Fair Work Information Statement: Must be given to all new employees, informing them of their workplace rights and minimum entitlements under the NES.
Need templates or tailored support? Our employment contract package and staff handbook service can be customised to your business and industry.
Are There Any Other Leave Types I Need to Be Aware Of?
Yes – other forms of leave, such as annual leave, compassionate leave, long service leave, and parental leave, all have different accrual rules and legal requirements. For further reading, check our guides on annual leave accrual in Australia and long service leave for the essentials.
Ongoing Compliance: What Else Do Employers Need to Know?
Managing leave isn’t a “set and forget” job. As your business grows and changes, keep these in mind:
- Update policies and employment terms if there are changes to the law or business structure.
- Communicate clearly with staff about their leave entitlements and the process for using them.
- Keep compliant records and payslips, showing accrued and taken personal leave balances for every employee.
- Respond promptly to Fair Work Ombudsman queries or audits; penalties for getting this wrong can be significant.
If you’re unsure about your obligations or want to avoid mistakes, our legal experts are ready to help.
Key Takeaways: Personal Leave Accrual in Australia
- Personal leave (sick/carer’s leave) accrues progressively for all permanent employees under the National Employment Standards.
- The accrual rate is 1/26th of ordinary hours worked per week, adding up to 10 days per year for full-timers and pro-rata for part-timers.
- Personal leave is calculated in hours, not days, and must be tracked accurately based on each employee’s actual roster.
- Unused personal leave accumulates and carries over but is not paid out on termination of employment (unless specified by an agreement).
- Mistakes in leave accrual or record-keeping can lead to Fair Work claims, backpay, or penalties – having the right contracts and workplace policies is essential.
- Stay on top of updates to workplace laws, and seek legal help to make sure your business is always compliant and fair to your workers.
If you would like a consultation on managing personal leave accrual or getting your employment contracts and policies in shape for your business, reach out to our friendly team at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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