An employee has queried whether they accrue annual leave whilst taking annual leave. What should I tell them?

Annual leave does accrue during a period of paid annual leave.

For National System employers, Section 87(2) of the Fair Work Act 2009 (Cth) (the Act) states that ‘an employee’s entitlement to paid annual leave accrues progressively during a year of service according to the employee’s ordinary hours of work, and accumulates from year to year’.

Therefore, annual leave accrues during any period of ‘service’. Section 22 of the Act notes that a period of ‘service’ is ‘a period during which the employee is employed by the employer, but does not include any period that does not count as service…’

The excluded periods are:

  • Any unauthorised absence
  • Any unpaid leave or unpaid authorised absence, other than when community service leave is taken
  • or a period of stand down
  • or a period of leave or absence prescribed by the regulations.

As paid annual leave, or authorised paid leave in general, is not mentioned as an excluded period, it counts as service and therefore annual leave accrues during this period.

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