Every Australian employer pays for leave, whether or not they think about it. The National Employment Standards (NES) in the Fair Work Act 2009 (Cth) guarantee minimum time off for most employees in the country, and those minimums sit underneath every modern award, enterprise agreement and employment contract. Get the scheme wrong and you can underpay staff, breach award conditions, or face a Fair Work Ombudsman investigation. Get it right and leave stops being a recurring headache and becomes a routine part of running payroll.
The NES exists to balance two things. Employees need protected time away from work, paid or unpaid, for rest, illness, family responsibilities and community obligations like jury service. Employers need predictable rules for managing absences, approving requests and planning coverage. This article explains how the scheme actually operates: who it covers, what triggers each type of leave, how accrual and payment work, and where the common mistakes happen.
Who does what in the leave scheme
Three parties carry the scheme, and each has a distinct role:
- The employee: Holds the entitlements, requests leave, and must give notice and, when asked, evidence that supports the reason for the absence.
- The employer: Administers accruals, approves or refuses requests, pays leave correctly, and keeps the records that prove all of it happened.
- The Fair Work Ombudsman: Enforces the scheme. It investigates complaints, audits employers and can take action for underpayment or record-keeping breaches.
Modern awards and enterprise agreements sit alongside the NES as a fourth layer. They cannot reduce an NES entitlement, but they regularly add to it, for example annual leave loading, extra shift-worker leave, or specific rules about close-down periods.
The NES is the floor, not the ceiling
The NES is set out in Part 2-2 of the Fair Work Act 2009 (Cth), and it applies to national system employees, which covers most private-sector employees in Australia. The key design feature is that the NES is a minimum standard. A modern award, enterprise agreement or individual contract can give employees more generous leave, but it can never give less. If a contract says an employee gets no paid annual leave, that term is unenforceable and the NES entitlement still applies.
That means the first question an employer should answer is not "what does the NES say", but "which award or agreement covers this employee". The NES sets the baseline, and the award or agreement determines what actually gets paid in your workplace, such as the rate of annual leave loading or the treatment of public holiday work. Where the two layers interact is where most compliance mistakes happen.
How each leave type works
Annual leave
Full-time and part-time employees accrue paid annual leave progressively through each year of service at the rate of four weeks per year under s 87 of the Fair Work Act 2009 (Cth). Shiftworkers defined as such by their modern award or enterprise agreement accrue five weeks. Accrual is based on ordinary hours, so a part-time employee accrues proportionally less, and there is no expiry date: unused annual leave carries over from year to year.
When an employee takes annual leave, you must pay them at their base rate of pay for their ordinary hours in the period under s 90. Some awards add an annual leave loading on top, commonly 17.5 percent, so check the applicable award before you process payment. You must not unreasonably refuse a request to take annual leave under s 88, and when employment ends, any accrued but untaken annual leave must be paid out in the final pay under s 90(2).
Annual leave can be cashed out, but only within strict limits. Under ss 93 and 94, any cashing out must be by a separate written agreement and cannot reduce the employee's remaining balance below four weeks. The same structure applies to award-covered and award-free employees.
Personal and carer's leave
Full-time employees accrue 10 days of paid personal and carer's leave per year under s 96 of the Fair Work Act 2009 (Cth), accruing progressively according to ordinary hours and accumulating from year to year. Part-time employees accrue the same entitlement on a pro rata basis. The leave covers the employee's own illness or injury, or the need to care for or support an immediate family or household member who is ill, injured or affected by an unexpected emergency under s 97.
Payment is at the base rate for the ordinary hours the employee would have worked, under s 99. You can ask for evidence that would satisfy a reasonable person, such as a medical certificate, when an employee takes this leave, and the Act's notice and evidence requirements in s 107 apply to paid personal and compassionate leave. Casuals do not accrue paid personal leave under the NES, but they are entitled to two days of unpaid carer's leave per occasion under s 102.
Compassionate leave
Employees are entitled to two days of compassionate leave for each permissible occasion under s 104 of the Fair Work Act 2009 (Cth): the death of, or a life-threatening illness or injury to, an immediate family or household member, and in some circumstances stillbirth or miscarriage. Full-time and part-time employees are paid for this leave. Casual employees receive the same two days but unpaid.
The leave can be taken as a single continuous two-day period, two separate single days, or any other arrangement you agree with the employee under s 105. This is one of the entitlements employers most often forget to track, because it is occasion-based rather than a running annual balance.
Parental leave
Unpaid parental leave under the NES runs on a service-based trigger. An employee is not entitled to take it unless they have completed, or will complete, at least 12 months of continuous service with you under s 67 of the Fair Work Act 2009 (Cth). Regular casuals can qualify after 12 months of regular employment on a comparable basis.
Eligible employees can take up to 12 months of unpaid parental leave around the birth or placement of a child. They can then request a further extension of up to 12 months under s 76, which means the total can reach 24 months after the birth or placement. The extension request must be in writing and given at least four weeks before the end of the available parental leave period, and you must respond within 21 days under s 76A. You can only refuse an extension if you have discussed it with the employee and genuinely tried to reach agreement. During extended leave, the parties can agree to "keeping in touch" days on which the employee performs work, which keeps the employee connected to the workplace without breaking the leave.
Government-funded paid parental leave is a separate scheme administered by Services Australia, not an employer obligation under the NES, although the two schemes are designed to run alongside each other.
Community service leave
Employees who engage in an eligible community service activity are entitled to be absent from work, including reasonable travel and rest time, under s 108 of the Fair Work Act 2009 (Cth). The eligible activities in s 109 are jury service, including attendance for jury selection, and voluntary emergency management activities with a recognised body such as a state emergency service.
Jury service is the one community service activity that attracts payment. For non-casual employees, you must pay the employee's base rate for their ordinary hours during the first 10 days of absence for a particular jury summons, reduced by any jury service pay the employee receives, under s 111. You can require evidence of the jury pay amount before paying. Voluntary emergency management leave is unpaid, and casuals are not paid for jury service under the NES, though their job is protected either way.
Public holidays
Employees are entitled to be absent from work on a public holiday in the place where they are based under s 114 of the Fair Work Act 2009 (Cth). Public holidays include the national days set out in s 115, plus days declared by state or territory law, including substituted days. Full-time and part-time employees who would ordinarily work on the day must be paid their base rate for those ordinary hours when they are absent, under s 116. A casual who is not rostered on a public holiday gets no payment.
You can request that an employee work on a public holiday, but only if the request is reasonable, and the employee can refuse if the request is unreasonable or their refusal is reasonable. Section 114 lists the factors that go into that assessment, including your operational requirements, the employee's personal circumstances including family responsibilities, and whether the employee could reasonably have expected to be asked. If the employee does work, award penalty rates will usually apply.
Long service leave and family and domestic violence leave
Long service leave is deliberately different from the rest of the NES because it is governed by state and territory legislation, not the Fair Work Act. Eligibility periods, accrual rates and cashing-out rules vary depending on where the employee works, so check the law of the relevant state or territory rather than assuming a uniform national rule.
One further NES entitlement is worth knowing about: paid family and domestic violence leave, which sits in the same division of the Act as personal and compassionate leave. It gives employees paid leave to deal with the effects of family and domestic violence, and it applies to casuals as well as full-time and part-time employees. The rules here have been expanded in recent years, so confirm the current position if it becomes relevant to your workforce.
How leave flows through the workplace
Once you know which entitlements apply, the operation of the scheme day to day follows a consistent sequence. The employee requests leave. You approve it, or refuse it on reasonable grounds. The leave is paid at the base rate for ordinary hours where it is paid leave. The accrual and the absence are recorded.
For planned leave such as annual leave, the practical question is notice and approval. The Act does not set a fixed notice period for annual leave, but it requires agreement, and s 88 makes it clear you cannot unreasonably refuse a request. For unplanned leave, employees must give notice as soon as practicable and provide the evidence you reasonably request under s 107. A simple policy setting out how much notice you want, who approves requests and what evidence is accepted will keep managers consistent and reduce disputes.
Record-keeping is where the scheme is actually enforced. Section 535 of the Fair Work Act 2009 (Cth) requires you to make and keep employee records for seven years, including records of leave. Pay slips must contain the information prescribed by the Fair Work Regulations, but the Fair Work Ombudsman confirms that leave balances do not have to appear on a pay slip. Showing them is best practice and good for trust, but it is not a legal requirement. The records, on the other hand, are non-negotiable, and if you do not keep them, you may bear the burden of disproving an underpayment allegation.
When employment ends, the scheme produces one final obligation: accrued but untaken annual leave must be paid out under s 90(2), and long service leave may also be payable under the relevant state or territory law. Getting final pay right matters, because this is the point at which disputes most often surface.
Where the scheme bites: common traps
A handful of mistakes account for most leave compliance problems:
- Treating casuals as entitled to paid leave: Casuals do not accrue paid annual or personal leave under the NES. Under most modern awards they receive a casual loading instead, which is designed to compensate for the absence of paid leave entitlements.
- Cashing out leave below the statutory floor: Annual leave cannot be cashed out if the balance would drop below four weeks, and personal leave below 15 days where an award or agreement permits cashing out.
- Refusing annual leave without reasonable grounds: A refusal must be defensible against the s 88 standard, and an unreasonable refusal can expose you to a general protections claim.
- Ignoring the award layer: Annual leave loading, shift-worker entitlements, close-down provisions and public holiday penalty rates all come from awards, and the NES will not tell you about them.
- Getting jury pay wrong: The make-up pay calculation offsets jury service pay and only applies to the first 10 days per summons, and you must ask for evidence of the jury pay before you pay.
- Skipping the parental leave extension process: You cannot simply say no to an extension request without first discussing it and genuinely trying to reach agreement.
- Sloppy records: Leave records must be kept for seven years, and missing records can shift the burden of proof against you in a dispute.
When to bring in a lawyer
Most leave problems are preventable, and a lawyer is most useful at two points. The first is setup: identifying the correct award coverage for each role, and building the contract and policy framework that reflects it, including how leave is requested, approved, evidenced and paid. The second is when something has already gone wrong: an underpayment allegation, a Fair Work Ombudsman investigation, or a dispute about a refusal of leave or a final pay calculation.
A lawyer can also help with the edge cases this article has flagged rather than resolved, such as whether a refusal of a public holiday work request is reasonable in your particular workplace, or how a state long service leave scheme applies to an employee who works across state lines. These are judgment calls that depend on your facts, and getting an early view is far cheaper than defending a claim.
The gap between the NES and your award is where mistakes live
The most valuable thing you can take from how this scheme works is that the NES is only half the picture. Every dollar of leave you pay is governed by the interaction between the statutory floor and the award or agreement on top of it, and that interaction is different for every role in your business. If you have not confirmed which awards cover your employees, or your contracts do not say how leave is requested and approved, that is the gap where underpayments, disputes and regulator attention start. A short review of your award coverage and leave policies now, with a lawyer if your workforce has complex rosters or multiple awards, will close most of that gap before it costs you anything.