Leave Entitlements Australia 2026: Annual, Sick, Long Service Leave Guide
The Three Types of Leave
Every Australian employee gets three types of paid leave.
Mixing them up is a common wage theft mistake. Get them wrong, and you owe backpay plus penalties.
Annual Leave (Vacation)
How much: 4 weeks per year (20 days or 160 hours).
Accrual: Builds up from day one. An employee working 52 weeks earns 4 weeks of annual leave.
Calculation: Hourly pay × hours worked ÷ 52 weeks = weekly annual leave accrual.
Example:
- Employee: $25/hour
- Works 40 hours/week
- Weekly accrual: $25 × 40 ÷ 52 = $19.23/week in annual leave
- After 52 weeks: $19.23 × 52 = $1,000 annual leave owed
When due: Annual leave is due when taken. Payment must happen on payday, not later.
Cashing out: In some awards, employees can cash out unused leave (with agreement). But they must take minimum 2 weeks/year.
Sick Leave (Personal/Carer’s Leave)
How much: 10 days per year (80 hours or 2 weeks).
Accrual: 10 days per year, regardless of hours worked.
Calculation: Daily rate × 10 days = annual sick leave value.
Example:
- Employee: $1,000/week salary
- Works 5 days/week
- Daily rate: $1,000 ÷ 5 = $200/day
- Annual sick leave value: $200 × 10 = $2,000/year
When due: When taken. Must pay on payday.
Important: Sick leave is NOT “use it or lose it.” Unused sick leave accrues. After 10 years, employees typically have 100+ days banked.
When employee leaves: Unused sick leave is NOT paid out (except in some industry-specific awards). It’s a benefit while employed.
Long Service Leave (LSL)
How much: 13 weeks after 10 years of service.
Accrual: Builds gradually. After 10 years, employee can take 13 weeks off (or payment if leaving).
When eligible:
- 10 years continuous service = 13 weeks LSL
- Each additional 5 years = 5 more weeks (some awards)
Calculation: Varies by award. Usually, weekly salary × 13 weeks.
Example:
- Employee: $1,500/week
- After 10 years: $1,500 × 13 = $19,500 LSL owed (or take 13 weeks off)
Important: LSL accrues even during unpaid leave (long-term illness, parental leave).
When employee leaves: Must be paid out if 10+ years’ service.
Common Mistakes
Mistake 1: Forgetting to pay leave on payday
Annual and sick leave must be paid when taken. If an employee takes leave in June, they get paid in June’s pay run. Not later.
Mistake 2: Confusing accrual with “per year”
Annual leave accrues gradually (1.54 hours/week if full-time). It doesn’t reset January 1st. An employee who leaves mid-year gets paid for accrued leave.
Mistake 3: Not accruing sick leave during unpaid leave
If someone takes 3 months unpaid maternity leave, sick leave still accrues. 10 days/year, regardless.
Mistake 4: Cashing out leave incorrectly
You can only cash out annual leave (and only if award allows + agreement exists). Sick leave cannot be cashed out.
Mistake 5: Forgetting LSL when employees leave
10+ years’ service? Must pay out 13 weeks LSL when they depart. It’s a legal entitlement, not optional.
Payroll Software Tracking
Your payroll software should track:
- Annual leave accrual (balance)
- Sick leave accrual (balance)
- LSL accrual (balance)
- Days taken each pay period
- Payment made for each type
Check your software. Can it separate the three types? If not, update it before 1 July 2026.
State Variations
Leave entitlements vary slightly by state. Fair Work sets the national minimum. Some states are more generous.
Check your state’s award or Fair Work’s website for specifics.
Get Help
Leave calculations are complex. One mistake = backpay + penalties.
In Campbelltown and Greater Sydney, we audit leave entitlements.
📞 Call: 04 044 71 816
We’ll review your leave accruals, identify underpayments, and ensure your software tracks correctly.
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