How is annual leave calculated when resigning from a job in Australia?

Upon resignation, employers must pay out 100% of your accrued, unused annual leave hours at your final base pay rate, plus any applicable leave loading required by your award.

What is the ATO PAYG tax withholding formula for unused leave termination payouts?

Unused leave payouts on termination are taxed under ATO Schedule 7 Marginal Method B(i) withholding rules rather than a flat arbitrary tax rate.

Do part-time employees accrue annual leave at the same rate as full-time employees?

Yes, part-time employees accrue 4 weeks of annual leave per year, pro-rated to match their ordinary weekly hours (e.g. 20 hrs/wk = 80 hours accrued per year).

Is superannuation paid on unused annual leave paid out upon resignation?

No. Under ATO Ruling SGR 2009/2, unused annual leave cash-outs upon termination are exempt from Super Guarantee contributions.

Does annual leave expire if not taken within a calendar year?

No. Under Fair Work NES rules, unused annual leave carries over from year to year and never expires.

Leave & Pay12 min read•Updated: 8 August 2026

Annual Leave Accrual & Resignation Payout Rules (2026–2027)

Essential Fair Work & ATO guide on annual leave accrual rates, full-time vs part-time pro-rata calculations, ATO Schedule 7 termination tax withholding, and 0% super rules.

Calcivo Workplace Rights Team

Fair Work & Payroll Specialists

ATO 2026-2027 Verified

Annual Leave Accrual & Resignation Payout Rules (2026–2027)

Key Financial Takeaways

✓Under the NES, full-time workers accrue 4 weeks (152 hours) of annual leave per year, while shiftworkers accrue 5 weeks (190 hours).
✓Part-time workers accrue leave on a pro-rata basis according to their contracted ordinary weekly hours.
✓Casual workers do not receive paid annual leave; instead, they receive a 25% casual loading in lieu of leave benefits.
✓Unused annual leave MUST be paid out upon resignation or termination at the employee base hourly pay rate.
✓Under ATO Ruling SGR 2009/2, Super Guarantee (12.0%) is NOT payable on unused annual leave paid out upon termination.

On This Page

Managing annual leave entitlements is a fundamental component of Australian employment law. Regulated under the National Employment Standards (NES) administered by the Fair Work Ombudsman, paid annual leave ensures that Australian workers can take time off while maintaining financial income.

This comprehensive guide details pro-rata accrual rates, resignation payout calculations, ATO Schedule 7 tax withholding, and superannuation rules.

1. Statutory National Employment Standards (NES) Accrual Rates

Annual leave accumulates progressively throughout the working year from an employee's first day of employment:

Employment Status	Annual Accrual	Accrual Per Month	Accrual Per Fortnight
Full-Time (38 hrs/week)	4 Weeks (152 Hours)	12.67 Hours	5.84 Hours
Shiftworker (Award Defined)	5 Weeks (190 Hours)	15.83 Hours	7.30 Hours
Part-Time (20 hrs/week)	4 Weeks (80 Hours)	6.67 Hours	3.08 Hours
Casual Employee	0 Hours (Exempt)	Replaced by 25% Casual Loading	Replaced by 25% Casual Loading

2. Resignation & Termination Payout Rules

When an employee leaves a business—whether through voluntary resignation or termination—the employer is legally required under Section 90(2) of the *Fair Work Act 2009* to pay out all accrued, unused annual leave.

Payout Components:

1
Base Ordinary Pay: Total accrued unused hours multiplied by the final base hourly rate.
2
Applicable Leave Loading: If the employee's award or enterprise agreement specifies leave loading (e.g. 17.5%), that loading must be included in the termination payout.

3. ATO PAYG Tax Withholding & Super Guarantee Rules

The Australian Taxation Office (ATO) applies specific tax and superannuation rules to termination payouts:

•
ATO Schedule 7 Marginal Withholding: Unused leave payouts are taxed using ATO Schedule 7 Marginal Method B(i). The payout is annualized to determine the marginal tax withholding rate.
•
Super Guarantee Exemption (SGR 2009/2): Under ATO Ruling SGR 2009/2, unused annual leave paid out upon termination is NOT Ordinary Time Earnings (OTE) and does not attract the 12.0% Super Guarantee contribution.