Unpaid Leave And Public Holidays: Employer’s Legal Obligations In Australia

Public holidays and leave entitlements can be tricky to navigate - especially when unpaid leave overlaps with a public holiday. As an employer, you want to do the right thing by your team and keep payroll spot on, without overpaying or missing an entitlement.

The good news is that Australian law gives you a clear framework. Once you understand how the National Employment Standards (NES) and relevant awards work, you can set up simple processes that keep you compliant and avoid disputes.

In this guide, we’ll unpack how unpaid leave interacts with public holidays, where the rules differ for casuals, and the practical steps you can take to manage requests, rosters and pay with confidence.

What Counts As Unpaid Leave (And When Is It An Entitlement)?

Unpaid leave is leave that doesn’t attract pay from the employer. Unlike annual leave or paid personal/carer’s leave, it’s generally not a standard entitlement unless the Fair Work Act 2009 (Cth) or another instrument specifically provides it.

Common scenarios include:

• Employee runs out of paid leave and asks for more time off for personal reasons
• Unpaid parental leave (if eligibility criteria are met)
• Community service leave (e.g. jury service has special rules)
• Extended unpaid sick leave by agreement
• Study, travel or other personal commitments by agreement

Outside of specific entitlements (like unpaid parental leave), taking unpaid leave is usually by mutual agreement. That makes it important to set expectations clearly - including how public holidays will be treated during any agreed leave period. For a quick refresher on employer options and obligations, it’s worth reviewing the basics of leave without pay rules.

Public Holidays Under The NES: Who Gets Paid (And Who Doesn’t)?

The NES recognises public holidays and gives employees a right to be absent on those days. Whether an employee is paid for a public holiday depends on their employment type and whether the day is one they would ordinarily work.

Permanent Employees (Full-Time and Part-Time)

• If a public holiday falls on a day the employee would ordinarily work, they are entitled to be absent and be paid their base rate for the ordinary hours they would have worked.
• If they work on the public holiday, you may need to pay penalty rates under the applicable award or enterprise agreement. You can check your settings against general guidance on penalty rates in Australia.

Casual Employees

• Casuals are generally not entitled to paid absence on a public holiday. If they don’t work, there’s usually no payment for the day.
• If a casual works on a public holiday, they are typically entitled to the relevant public holiday rates under the applicable award or agreement. You can also review how your weekend and holiday settings align with weekend pay rates in your industry.

Requests To Work On A Public Holiday

You can request that an employee work on a public holiday, and an employee can refuse if the request is not reasonable or the refusal is reasonable in the circumstances. What’s “reasonable” depends on factors such as the nature of your workplace, employee role, personal circumstances and roster fairness. Having clear rostering processes helps you balance business needs and entitlements - see our overview of the legal requirements for employee rostering.

When A Public Holiday Falls During Unpaid Leave: Scenarios And Examples

This is where confusion often arises. The general rule is straightforward: if an employee is on an approved period of unpaid leave when a public holiday occurs, they are not entitled to payment for the public holiday. The rationale is that the employee is absent and not otherwise scheduled to work due to the unpaid leave.

Scenario 1: Full Weeks Of Unpaid Leave

If a full-time employee is on two weeks of unpaid leave and a public holiday falls within that period, you don’t pay the public holiday because the employee is already on unpaid leave (i.e. not performing ordinary hours).

Scenario 2: Part-Week Or Short Periods

If unpaid leave is only for part of the week, the entitlement depends on whether the employee would otherwise have been at work on the public holiday. For example, if unpaid leave runs Monday–Wednesday and the public holiday is Friday (a normal workday), the employee would generally be paid for Friday as a public holiday. If the public holiday falls on a day the employee wouldn’t ordinarily work (e.g. their non‑rostered day), there’s no payment.

Scenario 3: Switching Between Paid And Unpaid Leave

If a public holiday falls during a period of paid annual leave or paid personal/carer’s leave, the day is treated as a public holiday rather than a day of leave - meaning the leave balance isn’t deducted and the employee receives their ordinary public holiday pay (if they’d ordinarily work that day). By contrast, if the employee is on unpaid leave at the time of the public holiday, the public holiday is not paid.

Scenario 4: Casual Employees On Unpaid Leave

Casuals aren’t paid for public holidays they don’t work, regardless of leave status. If a casual is not working that day because they’re on unpaid leave (or simply not rostered), there is no entitlement to paid absence. If they do work the public holiday, consult the applicable award for public holiday rates.

Scenario 5: Enterprise Agreements And Awards With Extra Rules

Modern awards and enterprise agreements can include additional terms about public holiday entitlements or how specific leave types interact with public holidays. Always check the instrument that applies to your workplace. If you’re unsure, consider a quick review of your coverage under modern awards.

What About Other Absences?

• Unpaid Parental Leave: If an eligible employee is on unpaid parental leave, public holidays that occur during that period are not paid.
• Community Service Leave: Jury service has its own payment rules, which differ to general unpaid leave. Treat jury service according to the specific NES provisions and any relevant state-based requirements.
• Closedowns/Shutdowns: If you have a shutdown and employees are on unpaid leave due to that shutdown, public holiday treatment may depend on the instrument and the basis of the shutdown. Get advice if you run annual closedowns that overlap public holidays.

Practical Steps: Policies, Payroll And Communication

Clear processes make all the difference. Here’s a practical checklist to help you manage unpaid leave and public holidays consistently.

1) Confirm Leave Type Upfront

When an employee requests time off, clarify whether it’s paid or unpaid and record the dates. Ensuring the leave type is properly captured in the system reduces errors when a public holiday falls inside that period.

2) Document Your Approach In Contracts And Policies

Your employment contracts should explain leave entitlements and how public holidays are treated. If you hire across different categories, use the right template for each - for example, a full-time or part-time Employment Contract for permanent staff and a casual Employment Contract for casuals. A well‑structured staff handbook can also set out how unpaid leave requests are assessed and how public holidays are paid.

3) Keep Rosters And Payroll In Sync

Public holiday payments depend on whether the employee would have worked that day. Align your rostering records with payroll so there’s a clear picture of who would ordinarily work on each public holiday. If your award sets public holiday rates, make sure your payroll settings reflect them and are consistent with your understanding of penalty rates.

4) Communicate Expectations Early

Explain to employees that unpaid leave periods don’t include paid public holidays. Doing this when you approve the leave helps avoid surprises later. If you operate through regular shutdowns or busy holiday periods, set expectations in policy and during onboarding.

5) Sense-Check Complex Scenarios

Edge cases can arise - for example, overlapping leave types, changes to rosters at short notice, or award clauses that change the outcome. In those situations, it’s sensible to reach out to an employment lawyer for a quick sense-check before finalising payroll.

Which Laws And Instruments Apply To Public Holidays And Leave?

Most Australian employees are covered by the national workplace relations system. The key sources to consider are:

• Fair Work Act 2009 (Cth) and the NES: Sets minimum standards for public holidays, leave and requests to work or not work on public holidays.
• Modern Awards or Enterprise Agreements: May prescribe public holiday penalty rates, shutdown provisions and how leave interacts with public holidays. Confirm your coverage under modern awards if you’re unsure.
• Employment Contracts: Should align with the NES and any applicable award or agreement but can clarify processes (e.g. how to request unpaid leave, what records are required).
• State/Territory Gazettes: Determine which days are public holidays in your location. Public holidays vary between states and territories.

Remember that contracts and policies can’t undercut minimum entitlements. If a clause is less favourable than the NES or an applicable award, the minimum standard will usually prevail.

Common Pitfalls (And How To Avoid Them)

Paying A Public Holiday During Unpaid Leave

It’s a common mistake to leave a public holiday as paid within an unpaid leave period for a permanent employee. The usual position is that the public holiday is not paid if the employee is on unpaid leave when it occurs, because they were not otherwise working. Double-check leave coding before processing the pay run.

Not Differentiating Casuals

Casuals are generally not paid for public holidays they don’t work. Avoid auto‑paying public holidays for casuals unless your award or agreement clearly provides for it in specific circumstances.

Inconsistent Rosters And Records

If your rosters aren’t finalised or are frequently changed after the fact, it’s hard to demonstrate whether an employee would have ordinarily worked on a public holiday. Keep your records consistent and make sure your team understands why this matters for entitlements.

Mixing Up Paid And Unpaid Leave

Public holidays that fall during paid leave are treated differently to those in unpaid leave. Make sure managers know the difference and how to submit requests correctly in your system so balances and payments are accurate.

Forgetting Award Nuances

Awards and enterprise agreements can add extra conditions for public holiday work, substitute days and shutdowns. If you operate under multiple awards, include a quick reference guide in your handbook and have a process for checking the right instrument before making payroll decisions.

Key Takeaways

• If a public holiday falls while a permanent employee is on unpaid leave, there is generally no payment for that public holiday.
• Public holidays during paid annual leave or paid personal/carer’s leave are treated as public holidays - the employee is paid for the day and their paid leave balance is not reduced.
• Casual employees are not paid for public holidays they don’t work; if they do work, check the applicable award for public holiday rates.
• Whether a public holiday is paid hinges on whether the employee would ordinarily have worked that day, so accurate rosters and records are essential.
• Set expectations in writing with clear Employment Contracts and a practical staff handbook, and align payroll settings with your award or agreement.
• When an award clause or unusual scenario creates uncertainty, a quick check with an employment lawyer can save time and prevent underpayments or disputes.

If you’d like a consultation on managing unpaid leave and public holidays in your workplace, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.