This article explains leave loading, an extra payment for some Australian workers. It will help you understand who is eligible, how it’s calculated, and when it’s paid.
what is leave loading?
Leave loading, also known as holiday loading or annual leave loading, is an extra payment given to some Australian workers on top of their annual leave pay. It was introduced in the 1970s to support workers who relied on overtime pay and higher wages.
How Leave Loading Works
Eligibility:
- Minimum Entitlement: Paid annual leave is a basic entitlement for Australian employees, but leave loading is not guaranteed.
- Award or Agreement: Your entitlement to leave loading depends on your specific award or agreement. Most modern awards include leave loading.
Payment:
- Rate: Typically, leave loading is around 17.5% extra on top of your annual leave pay.
- Timing: It’s usually paid at the same time as your regular annual leave pay.
- Termination: If you leave your job, you are generally entitled to be paid for any accrued annual leave and leave loading.
How Much is Leave Loading?
Standard Calculation: To calculate your annual leave loading:
- Multiply your weekly pay by 4.
- Multiply the result by 17.5%.
Pro-Rata Calculation: For pro-rata leave loading:
- Divide the number of weeks you worked by 40.6.
- Multiply the result by 4.
- Multiply the new result by 17.5%.
- Finally, multiply by your weekly pay.
Tax and Superannuation
Taxable: Leave loading is taxable. However, the first $320 is not taxable.
Superannuation: Generally, leave loading is included in ordinary time earnings (OTE), and employers must pay superannuation on this amount. If leave loading compensates for overtime, super may not be payable, but this must be documented by the employer.
What to Do If You’re Unsure About Leave Loading
Check Your Entitlements: Review your award or agreement for details.
Contact Your Union: For clarification or if you believe your employer hasn’t met their obligations.
For detailed advice, consult your union or HR department.
FAQs
What is recreation leave loading?
It’s an extra payment on top of the base rate of pay during annual leave, compensating for lost overtime and higher expenses.
When is Leave Loading Paid?
Leave loading is paid with your annual leave pay. On termination, any accrued leave and leave loading are paid out.
Is super payable on annual leave loading?
Yes, unless the leave loading is classified as compensation for lost overtime earnings, which must be documented.
Is leave loading paid on termination?
Yes, any accrued leave and leave loading are paid out upon resignation or termination.