How to Calculate Annual Leave Payout on Resignation
When you resign, are fired, or are made redundant in Australia, your employer is legally required to pay you for any accrued but unused leave. This is known as your "final pay" or "termination pay".
To accurately use our annual leave payout calculator Australia, check your final payslip to find your exact unused leave balances in hours. You then multiply these hours by your base hourly pay rate. Don't know how many hours you have accrued? Use our annual leave calculator to figure out your exact hours based on your weekly schedule.
| Type of Leave | Paid Out? | Condition / Rule |
|---|---|---|
| Annual Leave | Yes | Unconditional. All unused hours must be paid upon termination or resignation. |
| Sick / Carer's Leave | No | Unused personal leave is lost under the NES. |
| Long Service Leave (LSL) | Conditional | Only if you have reached the statutory pro-rata threshold (e.g., 7 years continuous service in Victoria). |
| Time Off In Lieu (TOIL) | Yes | Must be paid out at the overtime rate that applied when it was accrued. |
Is 17.5% Annual Leave Loading Payable on Termination?
This is where many Australian workers lose money. If you are covered by a Modern Award or an Enterprise Agreement, you might be entitled to an extra 17.5% "Annual Leave Loading" on top of your base pay when taking a holiday.
Crucially, the Fair Work Ombudsman clarifies that if your Award states you get leave loading when taking annual leave, it must also be included in your final payout when you resign. When using our tool above, simply check the "Apply 17.5% Leave Loading" box to see how much extra you are owed.
Annual Leave vs. Long Service Leave (LSL) Payout Rules
A common mistake during resignation is confusing the payout rules for annual leave with Long Service Leave (LSL). While they both appear on your payslip, their payout conditions are vastly different under Australian law.
- Annual Leave is Unconditional: Every single hour of unused annual leave must be paid out to you, regardless of how long you worked there.
- LSL is Highly Conditional: Long Service Leave is governed by individual state laws. If you have not crossed the statutory pro-rata threshold (for example, the 7-year continuous service mark in NSW or VIC), your LSL means nothing and will not be paid out.
Check our LSL Calculator VIC before entering hours into the payout tool if you are unsure about your eligibility.
How Much Tax is Deducted From an Annual Leave Payout?
Yes. The number you see in the calculator above is your Gross Payout (before tax). The Australian Taxation Office (ATO) requires employers to withhold tax from leave payouts. Because it is processed as a "Schedule 7 lump sum payment", it may be taxed differently than your standard standard weekly wages.
You should expect your final cash-in-bank (Net Pay) to be lower than the gross figure shown.