In Australia, all employees, except casual workers, are entitled to $4$4 weeks ($20$20 days) of paid holidays each year. This is known as annual leave, or holiday pay. Employees are also paid for public holidays (in NSW there are currently $13$13 each year). Payments for holidays are based on normal working hours and rates of pay.
Some workers are also entitled to an extra payment known as annual leave loading.
Annual leave loading
Annual leave loading is an extra payment on top of an employee's regular annual leave. It is calculated as $17.5%$17.5% of the normal or base rate of pay. Not all employees are entitled to annual leave loading. It usually depends on their employment contract, award or agreement.
Annual leave loading is also known as holiday loading.
Not all workers take their four weeks annual leave in a single block. For example, a worker may choose to split their holidays into two periods of two weeks each, rather than one period of four weeks. In these situations, the annual leave loading would be divided over two separate fortnights.
Worked example
Graham earns an annual salary of $\$85200$$85200. He is entitled to four weeks annual leave loading at $17.5%$17.5%. Assuming there are $52.18$52.18 weeks in a year,
- Calculate his normal weekly pay
- Calculate his normal pay over four weeks
- Calculate his annual leave loading over four weeks at $17.5%$17.5%
- Calculate his holiday pay for four weeks
Solution:
- Divide his annual salary by $52.18$52.18.
weekly pay $=$= $\frac{85200}{52.18}$8520052.18 $=$= $1632.809$1632.809... $=$= $\$1632.81$$1632.81 (rounded to the nearest cent) - Multiply his weekly pay by $4$4.
Four weeks pay $=$= $1632.81\times4$1632.81×4 $=$= $\$6531.24$$6531.24 - The leave loading is $17.5%$17.5% of his four weeks pay.
Annual leave loading $=$= $17.5%\times6531.24$17.5%×6531.24 $=$= $0.175\times6531.24$0.175×6531.24 $=$= $1142.967$1142.967... $=$= $\$1142.97$$1142.97 (Rounded to the nearest cent) - Add his leave loading to his four weeks pay.
Holiday pay $=$= $\text{Four weeks pay }+\text{Annual leave loading }$Four weeks pay +Annual leave loading $=$= $6531.24+1142.97$6531.24+1142.97 $=$= $\$7674.21$$7674.21
Practice questions
Question 1
Lachlan earns $\$1456.00$$1456.00 per week. Calculate his leave loading if it is $17.5%$17.5% of $4$4 weeks of normal pay. Give your answer to the nearest cent.
Question 2
Michael normally receives $\$1100$$1100 per fortnight as pay. He is taking holidays for four weeks and is to be paid for the four weeks as well as receiving a leave loading of $17.5%$17.5%. Calculate his gross pay for the four-week period. Give your answer to the nearest cent.
Question 3
Fred's annual salary is $\$50000$$50000 . At Christmas time, Fred takes half of his annual leave and is paid $2$2 weeks normal pay plus a holiday leave loading of $17.5%$17.5% on this amount.
Calculate the holiday leave loading. Assume that one year consists of $52.18$52.18 weeks, and give your answer to the nearest cent.
Find Fred’s total holiday pay. Assume that one year consists of $52.18$52.18 weeks. Give your answer to the nearest cent.
Outcomes
MS11-5
models relevant financial situations using appropriate tools