Types Of Leave In Australia: What Employers Need To Know

Leave isn’t just a compliance box to tick - it’s core to running a fair, productive workplace and looking after your people.

As a small business owner in Australia, understanding the different types of leave and how they apply can save you time, reduce disputes, and help you plan staffing without scrambling at the last minute.

In this guide, we’ll break down the main types of leave from an employer’s perspective, explain how entitlements work for different kinds of employees, and share practical steps for policies, approvals and payroll compliance. We’ll also cover common situations like Christmas shutdowns, time off in lieu, and cashing out leave - so you can set things up the right way from day one.

What Are The Main Types Of Leave In Australia?

Most Australian employees are entitled to leave under the National Employment Standards (NES) in the Fair Work Act, with some additional rights in modern awards and enterprise agreements. Here are the core categories you’ll need to manage.

Annual Leave (Paid)

• Full-time and part-time employees accrue four weeks of paid annual leave per year based on ordinary hours worked (more in some shiftwork scenarios).
• Annual leave accrues progressively and carries over year to year if unused.
• Some awards provide annual leave loading (often 17.5%) - check the applicable award before approving leave and running payroll.

Personal/Carer’s Leave (Paid Sick And Carer’s Leave)

• Full-time and part-time employees accrue 10 days of paid personal/carer’s leave per year (pro rata for part-time), for illness/injury or caring responsibilities.
• Unused paid personal leave carries over and does not get paid out on termination.
• You can ask for reasonable evidence (e.g. a medical certificate) for absences - see “Managing Leave Requests And Evidence Lawfully” below.

Compassionate Leave

• Full-time and part-time employees are entitled to 2 days of paid compassionate leave per permissible occasion (e.g. the death or serious illness of a close family member).
• Casuals receive 2 days unpaid compassionate leave per occasion.

Family And Domestic Violence Leave (Paid)

• All employees, including casuals, have access to 10 days of paid family and domestic violence (FDV) leave in each 12-month period.
• This entitlement is available upfront (not accrued) and renews on the employee’s work anniversary. It does not carry over if unused.

Parental Leave

• Eligible employees may take up to 12 months unpaid parental leave, with a right to request a further 12 months.
• Ensure you have a clear Parental Leave Policy covering notice, evidence, keeping-in-touch days and return-to-work arrangements.

Long Service Leave

• Long service leave (LSL) is state and territory based. Entitlements depend on where the employee works and their length of continuous service.
• Check the specific legislation for your state or territory and any applicable awards. Many employers include LSL in their payroll system to track accruals accurately.

Community Service Leave (Including Jury Duty)

• Employees may take community service leave for eligible activities like jury duty or emergency service activities.
• Jury duty includes paid make-up pay in some circumstances - keep good records of any amounts reimbursed by the court.

Public Holidays

• Employees are entitled to be absent on public holidays. If they work on a public holiday, check the applicable award for penalty rates or day-in-lieu arrangements.
• Reasonable requests to work and reasonable refusals can apply - manage this carefully and consult your award or agreement.

Unpaid Leave

• Unpaid leave might apply when paid leave is exhausted or for specific entitlements (e.g. unpaid carer’s leave for casuals, unpaid parental leave). This sits alongside your own policy about discretionary leave approvals.
• If you’re considering leave without pay (LWOP) for other reasons, make sure your policy is consistent and your payroll and accrual rules are clear. For context on this category, see unpaid leave.

Other Common Leave Types You Might Offer

• Study Leave (paid or unpaid, depending on your policy) - especially useful if you support professional development. For more on setting this up, see study leave.
• Time Off In Lieu (TOIL) - where time worked is compensated with time off rather than overtime pay, but only if the relevant award or agreement allows it. Read more about time off in lieu.
• Purchased Leave - some employers allow employees to “purchase” additional leave by reducing salary; document this clearly and check tax/payroll settings.
• Special Leave - such as cultural leave or volunteer leave, often offered as a discretionary benefit to support your team and values.
• Garden Leave - often used during notice periods for senior staff to protect business interests, covered further below and discussed in garden leave.

How Do Leave Entitlements Apply To Different Employees?

Leave entitlements depend on employment type and what instruments apply to your business (awards, enterprise agreements, contracts). Here’s the quick snapshot.

Full-Time Employees

• Accrue paid annual leave and paid personal/carer’s leave (plus other NES entitlements).
• Eligible for paid compassionate leave, FDV leave, public holidays, parental leave (if criteria met) and long service leave under state laws.

Part-Time Employees

• Similar entitlements to full-time, but all accruals are pro rata based on ordinary hours.
• Be consistent with pro rata calculations and make sure your payroll system is configured correctly.

Casual Employees

• No paid annual leave or paid personal/carer’s leave, but they do receive a casual loading (usually specified in the relevant award).
• Entitled to 2 days unpaid carer’s leave per occasion, 2 days unpaid compassionate leave per occasion, and 10 days paid FDV leave.
• Public holiday entitlements depend on whether they were rostered to work on that day (and award terms).

Award And Agreement Coverage

• Modern awards and enterprise agreements may include additional leave entitlements, loading, notice requirements or evidence rules.
• Always check the applicable instrument first - then confirm your arrangements in the employee’s Employment Contract.

Setting A Clear Leave Policy (And Systems)

Policies and systems are what keep leave management fair, consistent and compliant. If you’ve ever juggled overlapping holidays or last-minute sick days, you’ll know this matters.

What To Include In A Leave Policy

• Types of leave available in your business (NES-based plus any additional benefits you offer).
• How to apply for leave (notice periods, approval process, who to contact, and how to record it).
• Evidence requirements for personal/carer’s leave, compassionate leave and FDV leave.
• How you’ll handle shutdown periods, excessive accruals and directed leave (where awards allow).
• Rules for TOIL, overtime, and roster changes if relevant.

Where to document it? Many employers roll leave rules into a staff handbook that sits alongside the contract and award. If you’re setting things up, consider a comprehensive Staff Handbook with clear leave settings and procedures.

Payroll And Record-Keeping

• Use a reliable system to track accruals, balances, approvals and evidence. Small errors add up fast.
• Configure leave loading correctly if your award requires it.
• Keep records of leave requests and decisions - this helps with audits and disputes.

Contracts And Communication

• Confirm each employee’s status (full-time, part-time, casual) and reference the applicable award or agreement in the Employment Contract.
• Outline any non-standard arrangements (e.g. purchased leave or a specific TOIL agreement) clearly in writing.
• Make your policy accessible and train managers on how to apply it consistently.

Managing Leave Requests And Evidence Lawfully

You can’t always predict when someone will need time off, but you can set fair and lawful processes for handling requests, evidence and refusals.

Approving Or Refusing Leave

• Annual leave: Employees can request; you can approve or refuse on reasonable business grounds (e.g. peak periods, short staffing). Communicate early to avoid issues.
• Personal/carer’s leave: This is needs-based. Don’t unreasonably refuse if the criteria are met and evidence is provided when required.
• Public holidays: You can make a reasonable request to work; employees can reasonably refuse depending on the situation, award and personal factors.

Evidence Requirements

• It’s reasonable to ask for evidence (like a medical certificate) for personal/carer’s leave - especially for multiple days or if patterns emerge.
• Set this expectation in your policy and apply it consistently. For practical guidance on certificates and requests, see when to request medical certificates.
• Handle FDV leave information sensitively and confidentially. Limit access to records and train managers accordingly.

Privacy And Sensitive Information

• Only collect what you reasonably need to verify the leave entitlement.
• Store personal and health information securely and restrict access to “need to know” personnel only.

Return To Work

• After long absences (e.g. extended personal leave or parental leave), plan a structured return, including any reasonable adjustments if needed.
• Where appropriate, consider a fitness for work clearance - use a consistent, fair process documented in your policy.

Common Business Scenarios: Shutdowns, TOIL And Cashing Out

Some leave issues pop up often for small businesses. Here’s how to approach the big ones.

Annual Shutdowns (e.g. Christmas/New Year)

• Many awards allow you to direct staff to take annual leave during a shutdown, with specific notice rules. Check your award and build the dates and notice period into your policy.
• If an employee doesn’t have enough annual leave, your options might include unpaid leave by agreement or allowing negative leave balances - always check the award and document the arrangement.

Time Off In Lieu (TOIL)

• TOIL must be permitted by the applicable award or enterprise agreement, with rules about how it’s accrued, taken and paid out if unused.
• Document TOIL arrangements in writing, set expiry windows, and keep accurate records. Read more about the rules for time off in lieu.

Cashing Out Annual Leave

• Some awards or agreements allow cashing out annual leave if the employee keeps a minimum balance and there’s a written agreement for each cash out.
• Never pressure an employee to cash out. Check your award’s requirements and run a clear approval process via payroll.

Excessive Leave Accruals

• Where excessive accruals build up, certain awards allow you to direct an employee to take leave, subject to strict rules and consultation.
• Proactive rostering and early planning help avoid last-minute directives and keep morale high.

Leave During Notice Periods And Garden Leave

• Employees may request to use annual leave during notice. Consider operational needs and be consistent.
• Payment in lieu of notice may apply on termination in some cases - if you’re weighing this up, see payment in lieu of notice.
• For senior or client-facing roles, you might place someone on garden leave during notice to protect relationships and confidential information - ensure the contract allows for this and align your process with any post-employment restraints.

Study Leave And Professional Development

• If you offer study leave, define eligibility, whether it’s paid or unpaid, and any repayment or service requirements after the course. For background on structuring this, see study leave.

What Legal Documents And Policies Should You Have?

Clear documents make leave straightforward for everyone. Here are the core pieces most small businesses should consider.

• Employment Contract: Confirms employment type, award coverage, hours, overtime rules, and reference to your leave policy and procedures.
• Leave Policy (or Staff Handbook): Sets out the types of leave you offer, request/approval steps, evidence rules and how you manage shutdowns, TOIL and excessive accruals. A comprehensive Staff Handbook helps ensure consistency.
• Parental Leave Policy: Clarifies notice, eligibility, keeping-in-touch days and return-to-work planning. See Parental Leave Policy.
• Leave Request Forms/Workflow: Even if digital, have a documented process that captures dates, type of leave and manager approvals.
• Payroll Settings: Configure accruals, loading and award-specific rules to automate accurate balances and payslips.

If you’re refreshing your documents, this is a great moment to align contracts, policies and payroll settings so everything speaks the same language.

Practical Tips For Smoother Leave Management

• Set the tone early: Explain leave entitlements during onboarding and show employees where to find the policy.
• Plan ahead for peak periods: Encourage early annual leave bookings to balance business needs and staff preferences.
• Use managers’ calendars: Share visibility on key dates so you don’t approve overlapping leave that creates operational gaps.
• Be consistent: Apply rules evenly to maintain trust and reduce disputes.
• Train your leaders: A short briefing on evidence rules, FDV confidentiality and award requirements goes a long way.
• Review annually: Update your policy to reflect award changes and any new benefits you’d like to offer.

Key Takeaways

• Know the NES categories: annual leave, personal/carer’s leave, compassionate leave, FDV leave, parental leave, long service leave, community service leave and public holidays.
• Employment type matters: full-time and part-time employees accrue paid leave; casuals have different entitlements, including paid FDV leave.
• Policies and systems reduce risk: a clear leave policy, aligned Employment Contract and well-configured payroll make approvals and accruals straightforward.
• Evidence rules must be fair and lawful: set expectations in your policy and handle sensitive information carefully, especially for FDV leave.
• Plan for common scenarios: shutdowns, TOIL, cashing out and garden leave all require careful alignment with awards and contracts.
• Document everything: approvals, refusals, evidence, and balances - consistency and records help prevent and resolve disputes.

If you’d like a consultation on setting up leave policies, contracts and processes for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.