Who must pay annual leave loading where the award or contract provides?
The applicability test for Pay annual leave loading where the award or contract provides (FWO), computed across 35 industries, 9 business structures and 6 size bands.
Short answer: Some businesses
Applies when the business has employees.
What the obligation is
Most modern awards require 17.5% loading on annual leave taken or paid out on termination.
Section 90 Fair Work Act requires payment for accrued + untaken annual leave on termination. Most modern awards (and some enterprise agreements) require an additional 17.5% loading on annual leave taken or paid on termination. Loading must match the award basis (typically OTE).
The applicability test
Applies when the business has employees.
How the regulator frames it: Employers whose modern award or agreement provides for annual leave loading.
What triggers it: Employee takes annual leave or termination triggers payout.
Jurisdiction: Commonwealth law, so the test is the same in every state and territory.
Which industries are in or out
Outcome across the 35 industries Rules Mate maps (35 of 35: depends on size or structure).
The answer is the same in every industry: depends on size or structure. Industry does not change who must comply.
Business structure and size
Structure does not change the answer across all industries: for every structure the answer is "depends on size or structure".
| Size band | Answer across all industries, any structure |
|---|---|
| No employees (turnover $100K–$1M) | No |
| 1–5 employees (turnover $100K–$1M) | Yes |
| 6–19 employees (turnover $1M–$3M) | Yes |
| 20–99 employees (turnover $3M–$10M) | Yes |
| 100–499 employees (turnover $10M–$100M) | Yes |
| 500+ employees (turnover $100M–$1B) | Yes |
Worked examples
Each line is one run of the Rules Mate applicability engine for a single business profile, with the reason the engine gives:
- Pty Ltd company in real estate agents with 6–19 employees, turnover $1M–$3M: applies. You have employees (6–19)
- Pty Ltd company in real estate agents with no employees, turnover $100K–$1M: does not apply. Requires employees.
What you must do, and when
- When due
- On payment of leave / termination.
- Frequency
- When a triggering event occurs
- Evidence to keep
- Award analysis; payslip + payment evidence including loading.
- Status
- Current
- Priority
- High
Penalty for not complying
Maximum penalty: Civil penalty for underpayment + serious-contravention 10× multiplier potential.
Audit or assurance level
Rules Mate has not yet classified the audit or assurance level for this obligation. Any audit, review or certification requirement is set by the regulator source listed below.
Obligations with the same applicability test
If this obligation applies to you, so do these 11: the engine uses the same rule for each.
- Pay superannuation on every payday (Payday Super)
- Report under Single Touch Payroll Phase 2
- Pay employees in accordance with the applicable modern award
- Honour employees' right to disconnect (s 333M)
- Verify work rights via VEVO before employment
- Comply with Paid Parental Leave scheme (26 weeks by 1 July 2026)
- Provide 10 days personal/carer's leave per NES
- Provide 10 days paid family + domestic violence leave (FDV)
- Document VEVO checks + retain employer records (s 245AYL Migration Act)
- Provide minimum notice of termination (NES s 117)
- Right to Disconnect (s 333M FWA)
Where it sits in the corpus
Rules Mate tracks 19 published obligations tagged "workplace", 5 of them rated critical. For a professional services Pty Ltd company with 6–19 employees operating in every state, 13 of those apply outright. This obligation is rated high priority, and is triggered by events.
Regulator, legislation and tools
Regulated by Fair Work Ombudsman.
FWO: Enforces compliance with the Fair Work Act, awards, and agreements. Investigates underpayments, brings civil penalty proceedings, and publishes compliance notices.
FW Act: Federal workplace relations Act.
Free tools that help with this obligation:
Questions
- Who must pay annual leave loading where the award or contract provides?
- Applies when the business has employees.
- Do sole traders need to pay annual leave loading where the award or contract provides?
- Depends on size or structure. Across every industry and every size band, the engine's answer for a sole trader is: depends on size or structure.
- Do businesses with 1–5 employees need to pay annual leave loading where the award or contract provides?
- Yes (1–5 employees, turnover $100K–$1M).
- When is "Pay annual leave loading where the award or contract provides" due?
- On payment of leave / termination.
Related
Sources
Computed by the Rules Mate applicability engine from the published obligation corpus; facts last checked 3 October 2026. Rules Mate is not a law firm and this is general information, not legal advice. Confirm your position with the regulator source or a qualified adviser before acting.