Your guide to annual leave accrual

Annual leave allows full-time and part-time workers to take time off while still earning their regular income. Understanding annual leave accrual – how you ‘earn’ your leave entitlements – can help you get the most from your leave. 

In this article, we take you through what you need to know about annual leave accrual, including how to calculate your annual leave, your rights and entitlements regarding leave, and how to maximise your owed days off.

What is annual leave accrual?  

Annual leave accrual refers to the amount of paid annual leave days an employee has earned for the time they’ve worked. The average full-time employee in Australia is entitled to four weeks of annual leave, while part-time employees are entitled to pro-rata annual leave based on their hours worked. 

Accrued leave, meaning the annual leave you have earned, is calculated based on how many weeks you’ve worked for your employer. On average, the annual leave accrual rate is 2.923 hours per week for a full-time worker, pro rata for part-time employees.

How is annual leave accrued?

How does annual leave accrue? While annual leave accrual calculations are the same for every workplace, the policies may change depending on where you work. Here’s a closer look at the process and how to calculate your leave. 

Annual leave processes

Annual leave processes and policies vary from workplace to workplace. Their specific annual leave policies will tell you how you can use your leave, how to request it, how it accrues, and the maximum amount you can accrue. 

For example, most workplaces consider an annual leave balance of eight weeks to be ‘excessive’, and may require employees to take some of their leave before they accrue that much. Some awards allow employees to cash out some annual leave, as long as four weeks’ balance is left. Some employers require employees to give a minimum amount of notice when applying to take annual leave – generally two weeks, but it can be more.

Calculating accrued annual leave

Your annual leave accrual rate per hour depends on whether you're full time or part time. A full-time employee’s annual leave accrues at 2.923 hours multiplied by the number of weeks worked for the company (minus any leave taken). A part-time employee’s annual leave accrues by dividing the number of hours worked per week by 38, multiplied by 2.923 hours.

To work it out online, put your figures into an annual leave accrual calculator. You can also ask your HR manager or check your payslip, which should show your accrued annual leave hours. 

How to maximise your days off using your accrued leave  

With a little planning, you can maximise your accrued annual leave to get the most time off using the least amount of paid leave.

1. Know your annual leave entitlements 

To maximise your days off, it’s important to know how much leave you’re entitled to per year and how much of that you have already accrued. 

Make sure your leave entitlements match those outlined under Fair Work Australia and that the accrued figure on your payslip is correct. Lastly, find out if your employer is offering leave benefits in line with your industry’s standards – if not, you may be able to negotiate for more.

2. Familiarise yourself with company’s policy on annual leave accruement  

Read your company’s policy on annual leave accrual so you can plan accordingly. For example, if your workplace doesn’t allow you to accrue a large amount of leave, that might change your plans for an extended holiday. You may be able to cash out some of your annual leave if you’ve saved up more than four weeks’ worth and your workplace allows it.

3. Make full use of public holidays  

Public holidays can help you extend your holiday while using fewer accrued annual leave days. For example, over the Easter long weekend, both Friday and Monday are public holidays, which means you can be away from work for 10 consecutive days using only four days of annual leave. 

4. Research the best times to take your holidays 

Knowing how to calculate your accrued annual leave can help you plan your holidays and time off well in advance. This means you can be intentional with your holidays and time them to take advantage of cheaper travel periods, low seasons, and times your friends and family might have off.
 

5. Plan ahead and make necessary arrangements 

Planning time off in advance means you can submit your leave requests early, increasing your chances of getting it approved. In most workplaces, requests given with inadequate notice will be denied if there are already people off at that time. Most workplaces require a minimum amount of notice, so always check your company’s policies.

6. Disconnect from work  

The best way to maximise relaxation during your accrued annual leave time is to properly disconnect from work. Avoid checking emails and answering messages. Set an out of office reminder so your colleagues know whom to contact while you’re away. Before leaving, make sure all your urgent work is taken care of so you can switch off.

What to do when you have excessive annual leave? 

There are some instances where you may find yourself with what is called an ‘excessive’ annual leave balance. Your employer might tell you to take time off or cash out leave to reduce the balance of your accrued days – excessive is generally considered to be eight weeks. Here’s what you can do if you have excessive annual leave.

1. Review company policies  

Your first step should be to review your workplace’s annual leave policies. Find out the maximum number of annual leave days or weeks employees are allowed to accrue, how much leave can be used at one time, and any procedures for addressing excessive annual leave with HR or your manager.

2. Communicate with HR  

Find out from your HR department what your company’s policies are regarding an excessive annual leave balance. You might be able to cash out some of your leave, otherwise your employer may reasonably ask you to take some annual leave to get the balance down. 

3. Explore options with your manager  

Your manager should be able to advise you on taking excessive leave so that it doesn’t affect the rest of your team. They might suggest taking an extended break to use up leave, or help you plan smaller breaks throughout the year that are less disruptive to your teams’ productivity. Regular breaks from work are a healthy way to manage work stress and feel happy and productive when you’re back on the job. 

Annual leave benefits you and your employer, helping you maintain a healthy work-life balance so that you’re happy and productive in the workplace. Every full-time and part-time employee is entitled to a certain amount of leave, which accrues based on how many hours per week you work. By calculating your accrued leave and learning how to maximise it, you can get more days off per calendar year. If you’ve accrued excessive annual leave, you’ll need to figure out a way to reduce it, whether by taking a long break or by cashing out. 
 

FAQs

How do you calculate annual leave accrual? 

To calculate annual leave accrual as a full-time employee, multiply the number of weeks you have been employed at your current job by 2.923. This will give you the total hours of annual leave accrued. Make sure to deduct any annual leave you’ve already taken. 

How much annual leave do you accrue per week?

If you're a full-time employee, how much annual leave is accrued per week? The answer is approximately 2.923 hours. Part-time is pro rata, based on the number of hours an employee works in a week. 

How many hours is 4 weeks’ annual leave? 

Four weeks of annual leave for a full-time worker is equivalent to 160 hours of annual leave. For a part-time worker it's equivalent to 80 hours.

How much sick leave have I accrued?  

How much sick leave you accrue depends on whether you work full time or part time. If you are a full-time employee, you are entitled to 10 days of sick leave or carer’s leave per year, while a part-time employee gets the same amount prorated to hours worked.

What is an example of leave accrual? 

An example of annual leave accrual for a full-time employee:

Todd works 38 hours a week, 52 weeks a year. He has worked in his current job for 10 weeks. This means Todd has 10 x 2.923 hours of annual leave, equalling 29.23 hours. 

He wants to know how many days off he can take. So he divides 29.23 by the 7.6 hours he works each day, which equals 3.85. Todd has 3.85 days of annual leave accrued. 

How does holiday accrual work? 

Annual leave is accrued based on a full-time 38-hour work week, regardless of whether you work overtime. Part-time leave is accrued on a pro-rata basis, calculated by dividing the hours you worked in a week by 38, then multiplied by 2.923. 

Do you accrue annual leave while on annual leave?

Annual leave is accrued based on the ordinary hours worked by the employee, so yes, your annual leave continues to accrue while you’re on annual leave. The exception is if you are on unpaid leave. 

Should I use my annual leave before I quit? 

You can use your annual leave before you quit if you want to, but you don’t have to, as your employer must pay out any untaken annual leave. If you use all your annual leave before you quit, you won’t be paid out for any leave.

Do you accrue sick leave while on leave? 

Yes, you do accrue sick leave while on leave as it’s accrued based on your ordinary working hours. However, you do not accrue sick leave while on unpaid leave.

Do you accrue annual leave while on maternity leave?

You do accrue annual leave while on paid maternity leave, but you don’t accrue annual leave on any unpaid maternity leave days.