Leave Loading – what is it ??


The 17.5% leave loading is a wonderful historic legacy from the glory days of the Labour movement. The theory is when you are on holiday, you don’t have the opportunity to work overtime or do other things that might give you a bit extra in your pay packet each week. The 17.5% extra represents the extra earnings that you didn’t get the chance to earn. Of course, for people who work in most salaried jobs, there isn’t any overtime anyway, so the whole thing is faintly bizzare. This condition is a common feature of modern awards. The source of entitlement to annual leave loading when an employee proceeds on annual leave is usually the employee’s applicable relevant award or agreement or their individual contract of employment.

While you’re on leave, your rate of pay will be 117.5% of your normal rate of pay. So if your normal rate of pay is $2043.50 pf, your leave rate will be $2401.11 p

In the case of shift workers, an employee who would have worked shift work had they not been on leave is paid a 17¬Ω per cent loading or the shift loading including the relevant weekend penalty rates, whichever is the greater, but not both.
Except as otherwise provided by an industrial instrument, annual leave loading is payable on all accrued annual leave when taken by the employee and not only to the current year’s accrual. See Australian Liquor, Hospitality & Miscellaneous Workers Union v Metropolitan Ambulance Service [2002] FCA 1321.

Complying with the annual leave terms of a modern award may result in the employer breaching the Fair Work Act. This has happened with payment of annual leave loading on termination of employment. For example, many modern awards provide that an employee receives an additional 17 ¬Ω% annual leave loading when taking annual leave ⠬ but no provision regarding payment on termination.

The Fair Work Act (s90(2)) provides that a terminated employee with a period of untaken annual leave must be paid what they would have been paid if they had taken that period of leave, ie. their ordinary rate plus the annual leave loading.

This provision is under the National Employment Standards (NES); consequently it cannot be excluded by any term in a modern award, agreement, or other instrument that may provide for a lesser benefit.

If you are unsure about payment of leave loading contact us today on support@freshhrinsights.com