Leave Loading Explained: What It Is, Who Gets It, and How It's Worked Out
It's the extra 17.5% that appears on holiday pay — and almost nobody can tell you where it came from or whether they're actually entitled to it. Here's the full story: the 1970 decision that created it, how the maths works, and the one situation where you'd be better off without it.
What leave loading is
Leave loading is an extra percentage — almost always 17.5% — paid on top of your base pay for periods of annual leave. Take four weeks of holidays and, if you're covered, you don't just get four weeks of pay: you get four weeks of pay plus 17.5%.
The most important thing to know is where it comes from. Leave loading is not in the National Employment Standards, the set of minimum entitlements in the Fair Work Act. It comes from modern awards, enterprise agreements and employment contracts. That's why two people doing similar jobs can be treated differently: if your award provides for loading, you get it; if your agreement trades it away for a higher base rate, you don't.
Why it exists: the 1970 story
Leave loading began with a 1970 decision covering the Metal Trades award. The problem it solved was real: metal trades workers earned a significant share of their income from overtime and shift penalties. The moment they went on annual leave, that income stopped — so workers were effectively taking a pay cut to take the holidays they were entitled to, and many avoided taking them.
The loading was the fix: an amount on top of ordinary leave pay, calculated to roughly replace the overtime and shift earnings lost while away. Set at 17.5%, the idea spread through the award system industry by industry, until it became the standard figure Australians still see on their payslips today.
How it's calculated
The maths is deliberately simple:
Leave loading = base pay for the leave period × 17.5%
Worked example: you earn $35 an hour and work 38 hours a week. Four weeks of annual leave is worth 4 × 38 × $35 = $5,320.00 in base pay. Loading is $5,320.00 × 17.5% = $931.00, so your four weeks pay $6,251.00 in total.
Pro-rata applies the same way: one week of leave on the same wage carries $232.75 of loading (one quarter of $931). If your award sets a different percentage, or a cap, that document wins — the Leave Loading Calculator lets you enter your own rate.
Leave loading vs shift penalties — the catch
Remember the origin: loading was meant to replace lost shift earnings. Some awards still honour that logic literally — a shiftworker on annual leave receives the loading or the shift penalties they would have earned, whichever is higher, not both.
That comparison can go either way. On the worked example above, loading is worth $931.00. If the shifts you missed would have paid $880.00 in penalties, loading wins by $51.00. But if you're a heavily-penalised shiftworker — regular nights and weekends — your penalties over four weeks could pass $931 easily, and the penalties would be the better outcome. Our calculator runs this exact comparison, because it's the check most payroll summaries never show you.
Part-timers, casuals and salaried staff
Part-time employees receive loading pro-rata, on the leave pay for their ordinary hours — the percentage doesn't change, only the base it's applied to.
Casual employees don't receive leave loading at all: they have no annual leave entitlement to attach it to. Don't confuse it with the 25% casual loading, which is a different payment compensating casuals for leave and other entitlements they don't get.
Salaried and agreement-covered staff vary most. Many salaried roles have no separate loading; some enterprise agreements roll it into a higher base rate, and some contracts quote an "all-in" loaded rate that already includes it. If your rate is loaded, you're being paid the amount in advance in every pay run — you won't see a separate 17.5% when you take leave.
Loading when you leave
When employment ends, unused annual leave is paid out — and where your award provides leave loading, the payout includes the loading on that unused leave too. It's a meaningful amount: on a $4,606 leave payout, $686 of it is the loading component. This is one of the most commonly missed items in a final pay, so check yours line by line — our Final Pay Calculator includes the loading toggle, and the Annual Leave Calculator values your balance with and without it.
Common questions
Is leave loading compulsory?
Only if your award, enterprise agreement or contract provides for it. Leave loading is not part of the National Employment Standards, so there is no universal legal right to it — most modern awards include it, which is why most employees receive it.
Why is it 17.5%?
The 17.5% figure comes from the 1970 Metal Trades award decision, which estimated what a typical worker lost in overtime and shift earnings while on annual leave. The rate was widely adopted across the award system and has stuck ever since.
Do casuals get leave loading?
No. Casuals do not accrue annual leave, so there is no leave pay to load. Their 25% casual loading is a separate payment that partly compensates for not receiving paid leave at all.
Is leave loading taxed?
Yes. Leave loading is ordinary income and is taxed with your pay in the pay run it is paid, including when it forms part of a leave payout at the end of employment.
My pay rate is 'loaded' — do I still get leave loading?
Probably not separately. A loaded (all-in) rate already includes an amount in place of loadings and other entitlements, as set out in your agreement or contract. You receive the higher flat rate instead — check the document that sets your pay.
Sources: Fair Work Ombudsman (annual leave and leave loading guidance). Rules checked: October 2026.
LeavePayout gives estimates only. It is not legal or financial advice. Confirm your entitlement with your employer, your award or agreement, your state regulator or the Fair Work Ombudsman.