Most explanations of leave loading stop at "multiply your ordinary pay by 17.5%". That is right for roughly two thirds of awards and wrong for the rest, because many awards pay the greater of 17.5% or the penalty rates you would have earned. The part that is almost universally misreported is who that higher-of test applies to. It is widely described as a shift worker rule. On 11 of the 33 awards on this site, it applies to day workers as well, which means someone who never works a shift roster but regularly works weekends can be owed more than 17.5%.
Key takeaways
- The base calculation is ordinary pay for the leave x 17.5%.
- Many awards instead pay the greater of 17.5% or the penalties you would have earned during the leave. You get one or the other, never both.
- The higher-of test is not only for shift workers. It covers day workers in 11 of 33 awards.
- Two awards, Security and Mining, compare whole-of-pay instead of comparing the loading.
- Three awards have no shiftwork provisions at all, so there is no shift comparison to make.
The basic 17.5% calculation
Start with the ordinary pay for the period of leave, then add 17.5%.
| Step | Working | Amount |
|---|---|---|
| Base hourly rate | Given | $32.00 |
| Ordinary hours in the leave | 2 weeks x 38 | 76 hours |
| Ordinary pay for the leave | 76 x $32.00 | $2,432.00 |
| Leave loading | $2,432.00 x 17.5% | $425.60 |
| Total | $2,432.00 + $425.60 | $2,857.60 |
Loading is calculated on ordinary hours at your base rate. Overtime and most allowances sit outside it. The leave loading calculator runs this for you and applies your award's rule.
The higher-of test
Many awards do not simply pay 17.5%. They pay whichever is greater: the 17.5% loading, or the amount you would have received including the penalty rates attached to the hours you would have worked. The wording is typically "whichever is the greater but not both", which makes clear you receive one or the other.
The point is to protect people whose regular income depends on penalties. If your usual fortnight includes weekend ordinary hours worth 25% more than 17.5% of your base, the flat loading would leave you worse off for taking leave, and the higher-of test stops that.
Day workers are covered too
This is the part that is usually reported incorrectly. The higher-of test is commonly described as a shift worker protection. In 11 of the 33 awards on this site, the award text applies it to day workers by name.
"For an employee who would have worked on day work only had they not been on leave, the additional payment is the greater of: (i) 17.5% of the minimum hourly rate...; or (ii) the minimum hourly rate ... inclusive of weekend penalty rates..."
The 11 awards where a day worker gets a higher-of test are Clerks, General Retail, Manufacturing, Banking and Finance, Fast Food, Hair and Beauty, Transport, Waste Management, Cleaning Services, Pharmacy and Storage Services. General Retail states it at clause 28.3(c), Manufacturing at 34.4(b)(i), Banking and Finance at 22.3(b)(i), Pharmacy at 23.3(b)(i), Transport at 24.4(b)(i) and Waste Management at 22.2(a).
Contrast that with Nurses, where clause 22.5(a) gives an employee other than a shiftworker a flat 17.5%, and only clause 22.5(b) applies the higher-of test to shiftworkers. Aged Care and SCHADS use the same shape. So the rule genuinely does differ by award, and the common shorthand is unreliable.
If you are a day worker on one of those 11 awards and you regularly work weekend ordinary hours, work out both figures and take the larger. Your award's rule is stated on its page in the award index.
Two awards compare whole-of-pay
Security (MA000016) and Mining (MA000011) do something different again. Rather than comparing a loading against penalties, they compare total pay.
The employer must pay the greater of: "(i) the amount the employee would have earned during that period for those ordinary hours had they not been on leave; and (ii) the employee's minimum hourly rate ... plus a loading of 17.5%."
The practical difference is that the comparison is run on the whole amount, not on the loading component, and it is not split by worker type. Everyone under those awards gets the same test.
A worked example
A retail day worker on $30.00 an hour takes two weeks of leave. Their ordinary roster includes eight Saturday hours a fortnight at 125% and four Sunday hours at 150%.
| Option | Working | Amount |
|---|---|---|
| Ordinary pay for 76 hours | 76 x $30.00 | $2,280.00 |
| Option A: flat 17.5% | $2,280.00 x 17.5% | $399.00 |
| Option B: weekend penalties | (8 x $7.50) + (4 x $15.00) | $120.00 |
| Paid | The greater of A and B | $399.00 |
Here the flat loading wins, which is the usual outcome for a modest weekend roster. The test starts to matter when weekend and evening hours make up a large share of the roster, so it is worth running rather than assuming. Note that under the old shorthand this employee would not even have been told the test existed, because they are a day worker.
Common questions
Do I get both the 17.5% and my penalty rates?
No. The awards say "whichever is the greater but not both". You receive one or the other.
Is loading calculated on my base rate or my total pay?
On ordinary hours at your base rate. Overtime and most allowances are excluded, which is why the loading on a high-overtime job looks smaller than expected.
What if my award has no shiftwork provisions?
Then there is no shift comparison to run. Fast Food, Hair and Beauty and Teachers have no shiftwork concept. In Fast Food and Hair and Beauty the higher-of test still applies, and it applies to day workers.
Does leave loading apply to leave paid out on termination?
Generally yes where the award provides loading, though the tax treatment changes. See annual leave payout tax.
Author & reviewer
Sarah has spent over a decade advising Australian SMBs on Fair Work, NES compliance, and payroll. Based in Sydney, she has worked across hospitality, retail and professional services.