Australia — Statutory Benefits & Leave

The Fair Work Act 2009 (Cth) establishes the national workplace relations system that governs most employment relationships in Australia. Part 2-2 of the Act sets out the National Employment Standards (NES), a legislated floor of minimum entitlements that apply to employees covered by the national system, regardless of whether they are also covered by a modern award or enterprise agreement.

Legislative framework and coverage

Section 61 of the Fair Work Act 2009 provides that the National Employment Standards are minimum standards applying to the employment of employees. The NES took effect on 1 July 2009 when the Fair Work system commenced, replacing the previous Australian Fair Pay and Conditions Standard.

Coverage turns on whether the employer is a national system employer and the employee is a national system employee as defined in Part 1-3 of the Act. The national system covers most private-sector employers operating as constitutional corporations (trading or financial corporations formed within the limits of the Commonwealth), the Commonwealth and its agencies, employers in the territories, and—since state referrals of power—most private employers in the referring states. Important exclusions include most state public sector employees and local government employees in certain states (particularly Western Australia from 1 January 2023), who remain covered by state industrial relations systems.

All national system employees are covered by the NES—full-time, part-time, and casual employees. However, casual employees receive only certain NES entitlements: the Fair Work Information Statement, maximum weekly hours, requests for flexible working arrangements (if employed on a regular and systematic basis for at least 12 months with a reasonable expectation of continuing employment), unpaid parental leave (same qualifying period), notice of termination, and the Casual Employment Information Statement. Casuals do not accrue paid annual leave or paid personal/carer's leave.

The ten National Employment Standards

Part 2-2 establishes ten minimum entitlements, organised across Divisions 3 through 12:

1. Maximum weekly hours (Division 3, s 62) — 38 hours per week plus reasonable additional hours
2. Requests for flexible working arrangements (Division 4, s 65) — certain employees may request changes to working arrangements
3. Parental leave and related entitlements (Division 5, ss 67–85) — up to 12 months of unpaid leave, with a right to request an additional 12 months, plus adoption-related leave
4. Annual leave (Division 6, ss 87–94) — four weeks of paid leave per year (4.8 weeks for certain shiftworkers)
5. Personal/carer's leave and compassionate leave (Division 7, ss 95–106B) — ten days of paid personal/carer's leave per year for full-time employees (pro-rata for part-time), plus two days of unpaid compassionate leave per occasion and (from 1 February 2023) ten days of paid family and domestic violence leave per year
6. Community service leave (Division 8, ss 107–113) — unpaid leave for voluntary emergency management activity and jury service
7. Long service leave (Division 9, s 113) — this NES division operates as a statutory placeholder; actual entitlements are set by state and territory long service leave legislation, not by the Fair Work Act itself
8. Public holidays (Division 10, ss 114–116) — entitlement to be absent from work on public holidays
9. Notice of termination and redundancy pay (Division 11, ss 117–123) — notice periods ranging from one to five weeks based on length of service, plus statutory redundancy pay for employees with at least one year of service (calculated on a sliding scale from four to sixteen weeks' pay)
10. Fair Work Information Statement and Casual Employment Information Statement (Division 12, ss 124–125A) — employers must provide the FWIS to all new employees and the CEIS to new casual employees when they start employment

Interaction with awards and agreements

Section 55 of the Fair Work Act 2009 establishes that a modern award or enterprise agreement must not exclude the NES or include terms that provide entitlements that are less beneficial than the corresponding NES entitlement. Any such term has no effect (s 56). However, awards and enterprise agreements may include terms that are ancillary or supplementary to the NES, or that deal with matters not covered by the NES. For example, an award may specify procedural rules for requesting annual leave, set a higher annual leave entitlement (e.g., five weeks instead of the statutory four), or provide additional paid leave categories.

For employees not covered by an award or agreement (award/agreement-free employees), the NES operate alongside the National Minimum Wage to establish the complete statutory floor.

Administrative oversight and enforcement

The Fair Work Ombudsman is responsible for promoting and monitoring compliance with the Fair Work Act, including the NES. Employers must provide every new employee with the Fair Work Information Statement when they start employment (s 124), and must provide casual employees with the Casual Employment Information Statement at the start of employment and at prescribed times throughout the employment relationship (s 125A).

Contraventions of NES entitlements are civil remedy provisions under Part 4-1 of the Fair Work Act 2009 (ss 44, 539). The Federal Court or Federal Circuit and Family Court may impose pecuniary penalties for breaches, with maximum penalties set on a per-contravention basis and higher penalties for serious contraventions involving deliberate or systemic conduct (s 557).

For cross-border employers hiring their first Australian employee, understanding the NES framework is critical: these entitlements cannot be contracted out or waived by agreement, and failure to comply exposes the employer to regulatory enforcement and potential class-action claims by affected employees.

Source: Fair Work Act 2009 (Cth) Source: National Employment Standards - Fair Work Ombudsman

Accrual entitlement

Section 87 of the Fair Work Act 2009 provides that a full-time employee is entitled to four weeks of paid annual leave for each year of service. A part-time employee is entitled to paid annual leave on a pro-rata basis according to the employee's ordinary hours of work. Casual employees are not entitled to paid annual leave under the National Employment Standards.

For a full-time employee working the standard 38-hour week, four weeks of annual leave equals 152 hours of accrued leave per year of service. The accrual is progressive and accumulates throughout the year based on ordinary hours of work, rather than crystallizing on an anniversary date. An employee may take annual leave once it has accrued (s 88(1)).

Shiftworker entitlement — five weeks

Section 87(1)(b) provides that an employee who is (or was) a shiftworker during the relevant year of service is entitled to five weeks of paid annual leave (or the equivalent pro-rata entitlement for part-time shiftworkers).

An employee qualifies as a shiftworker for NES purposes if:

• the employee is covered by a modern award or enterprise agreement that defines or describes the employee as a shiftworker for the purposes of the NES; or
• for award/agreement-free employees, the employee is employed in an enterprise in which shifts are continuously rostered 24 hours a day for seven days a week, the employee is regularly rostered to work those shifts, and the employee regularly works on Sundays and public holidays (s 87(3)).

The Fair Work Ombudsman has confirmed that the shiftworker definition is strict: an employee who works some weekend or evening shifts but does not meet the statutory test remains entitled to four weeks, not five weeks, of annual leave.

When annual leave accrues

Annual leave accrues based on the employee's ordinary hours of work (s 87). Section 20 of the Fair Work Act and regulation 1.11 of the Fair Work Regulations 2009 define ordinary hours of work for award/agreement-free employees; for employees covered by a modern award or agreement, ordinary hours are defined by the instrument.

Annual leave continues to accrue during periods of:

• paid leave (annual leave, personal/carer's leave, paid family and domestic violence leave, compassionate leave);
• unpaid parental leave and unpaid family and domestic violence leave (s 87(2));
• community service leave, including jury service; and
• authorized stand-down periods under s 524 of the Fair Work Act or under an applicable enterprise agreement or contract.

Annual leave does not accrue during:

• ordinary unpaid leave (unless an award or agreement provides otherwise);
• unpaid leave taken while receiving payments under the government-funded Paid Parental Leave scheme (because the employee is not performing work and the employer is not paying); or
• a period of annual leave that has been cashed out under s 94.

Taking annual leave

Section 88(1) provides that paid annual leave may be taken for a period agreed between the employer and the employee. An employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave (s 88(2)).

Payment for annual leave

Section 90(1) provides that if an employee takes a period of paid annual leave, the employer must pay the employee at the employee's base rate of pay for the employee's ordinary hours of work in the period.

For employees covered by a modern award or enterprise agreement, the award or agreement may specify that the employee is entitled to payment at the employee's full rate of pay (which includes applicable allowances, loadings, and other separately identifiable amounts) rather than the base rate of pay. Many modern awards provide for an annual leave loading of 17.5% in lieu of shift penalties and weekend loadings that the employee would have received if the employee had been at work. The loading is paid if it results in a higher amount than the employee would have received under the full-rate-of-pay method.

Payment on termination

Section 90(2) provides that if the employment of an employee ends and, at the end of the employment, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave. This payment is made at the base rate of pay (or full rate of pay if the award or agreement so provides) and includes any applicable annual leave loading if the employee's award or agreement requires it. The Fair Work Ombudsman has confirmed that untaken annual leave must be paid out on termination; it cannot be forfeited.

Cashing out annual leave

Section 92 of the Fair Work Act 2009 establishes a strict prohibition: paid annual leave must not be cashed out except in accordance with permitted cashing-out terms in a modern award, enterprise agreement, or (for award/agreement-free employees) a written agreement under s 94.

For award/agreement-free employees, s 94 permits cashing out only if:

• the employee has accrued at least four weeks of paid annual leave (the minimum entitlement);
• the agreement to cash out is in writing and signed by the employer and employee;
• the employee is paid at least the amount that would have been payable had the employee taken the leave; and
• the cashing out does not result in the employee's remaining accrued entitlement being less than four weeks.

Most modern awards that permit cashing out impose additional restrictions, commonly limiting cashing out to a maximum of two weeks of accrued leave in any 12-month period.

Section 94(2) makes it unlawful for an employer to exert undue influence or undue pressure on an employee to make (or not make) an agreement to cash out paid annual leave. Contraventions are civil remedy provisions enforceable by the Fair Work Ombudsman, with pecuniary penalties available under Part 4-1 of the Fair Work Act.

Interaction with modern awards and enterprise agreements

Section 93 of the Fair Work Act 2009 permits a modern award or enterprise agreement to include terms dealing with how annual leave is taken (for example, specifying minimum notice periods for leave requests or setting out a dispute-resolution procedure) and how it is cashed out, provided those terms do not result in the employee receiving less than the NES entitlement of four weeks (or five weeks for shiftworkers). An award or agreement may provide a higher annual leave entitlement (for example, five weeks for all employees or six weeks for shiftworkers), and that higher entitlement becomes the minimum enforceable standard for employees covered by the instrument.

For cross-border employers setting up an Australian entity and hiring their first local employee, understanding the annual-leave accrual and payment mechanics is essential for payroll configuration. The statutory floor is four weeks (152 hours for a full-time 38-hour-week employee), accrual is progressive, and untaken leave is a balance-sheet liability that must be paid out on termination at the employee's base rate (or full rate if the award so requires) plus any applicable loading.

Source: Fair Work Act 2009 (Cth), ss 87–94 Source: Fair Work Regulations 2009 (Cth), reg 1.11 Source: Annual leave - Fair Work Ombudsman

Statutory rate and effective date

Employers covered by the national system must make superannuation (pension) contributions for eligible employees under the Superannuation Guarantee (Administration) Act 1992 (Cth). The superannuation guarantee rate is 12% of each eligible employee's ordinary time earnings, effective 1 July 2025. This is the final scheduled increase in the phased rate pathway; the rate was 11.5% from 1 July 2024 to 30 June 2025.

The SG rate is set by reference to former sections 20 and 21 of the Superannuation Guarantee (Administration) Act 1992 (as amended by subsequent Treasury Laws Amendment Acts). The Australian Taxation Office publishes the current and historical rates in its Super guarantee rate schedule.

Ordinary time earnings (OTE)

The contribution base is the employee's ordinary time earnings (OTE), a term defined in the Superannuation Guarantee (Administration) Act 1992. OTE is a subset of an employee's pre-tax salary and wages and reflects payments in respect of the employee's ordinary hours of work. It excludes overtime, payments for hours worked outside ordinary hours, and certain leave payments (most notably, government-funded paid parental leave under the Paid Parental Leave Act 2010).

For employees covered by a modern award or enterprise agreement, ordinary hours of work are defined by the instrument. For award/agreement-free employees, ordinary hours are generally capped at 38 hours per week under the Fair Work Act 2009, though this does not override the OTE definition for superannuation purposes. If overtime amounts cannot be distinctly identified in the payroll record, the hours actually worked will be treated as ordinary hours of work and included in OTE.

Maximum contribution base

Employers are not required to pay superannuation guarantee on the portion of an employee's OTE that exceeds the maximum contribution base (MCB) for the financial year. The MCB is indexed annually. For the 2025–26 financial year, the quarterly MCB is $62,500, which equates to a maximum annual OTE base of $250,000. The maximum SG contribution per employee per quarter (for earnings at or above the MCB) is therefore $7,500, or $30,000 per year.

The maximum contribution base is calculated by dividing the annual concessional contributions cap by the SG percentage and rounding down to the nearest $10 multiple, then dividing by four to produce the quarterly MCB (for periods ending on or before 30 June 2026).

Payment frequency and quarterly due dates

For quarterly periods ending on or before 30 June 2026, employers must pay SG contributions at least quarterly. Contributions may be paid more frequently (weekly, fortnightly, monthly) if the employer chooses. The quarterly due dates are:

• Quarter 1 (1 July – 30 September): due 28 October
• Quarter 2 (1 October – 31 December): due 28 January
• Quarter 3 (1 January – 31 March): due 28 April
• Quarter 4 (1 April – 30 June): due 28 July

If a due date falls on a weekend or public holiday, the contribution must be received by the employee's complying superannuation fund on or before the next business day.

From 1 July 2026, the Payday Super regime takes effect, requiring employers to pay SG contributions at the same time as salary and wages (i.e., on each payday). Under the Payday Super rules, contributions must be received by the employee's superannuation fund within seven calendar days of the payday on which the qualifying earnings are paid, to avoid the superannuation guarantee charge.

Superannuation guarantee charge (SGC) for late or missed payments

If an employer does not pay the required SG amount in full, on time, and to the correct complying superannuation fund, the employer becomes liable for the superannuation guarantee charge (SGC). The SGC is calculated on a per-quarter basis (for periods ending on or before 30 June 2026) and comprises:

• the SG shortfall (calculated as salary or wages × the SG rate, using total salary or wages rather than OTE — a broader and potentially higher base);
• nominal interest charged on the shortfall from the start of the quarter to the date the SGC statement is lodged (compounded daily using the general interest charge rate); and
• an administration fee of $20 per employee per quarter.

The SGC is not tax-deductible, whereas timely SG contributions paid to a complying fund are generally tax-deductible in the financial year the payment is received by the fund.

An employer with an SG shortfall must lodge a Superannuation Guarantee Charge statement with the ATO and pay the SGC by the due date, which is one calendar month after the quarterly SG due date (for example, the SGC statement for the July–September quarter is due 28 November). The Fair Work Ombudsman and the ATO coordinate enforcement; employees can report unpaid superannuation via the ATO's online service.

Employee eligibility

All employees covered by the national system are eligible for SG contributions, regardless of earnings level, provided they are 18 years or older, or under 18 and working more than 30 hours per week. The SG obligation applies to full-time, part-time, and casual employees. There are narrow exclusions for certain employees paid wholly for domestic or private work for fewer than 30 hours per week and for employees paid to do work of a wholly private or domestic nature.

Fund choice and stapled funds

Employers must offer each eligible employee a choice of complying superannuation fund (using the Superannuation standard choice form, NAT 13080) when the employee commences employment. If the employee does not make a choice, the employer must pay SG contributions into the employee's stapled superannuation fund — an existing superannuation account that is linked to the employee's tax file number and follows the employee from job to job. Employers request stapled fund details from the ATO. If no stapled fund exists, the employer pays into the employer's nominated default fund.

Failure to offer an eligible employee a choice of fund results in a choice liability equal to 25% of the employee SG shortfall for the period, capped at $500 per notice period per employee. This choice liability is included in the SGC statement.

Interaction with modern awards and enterprise agreements

A modern award or enterprise agreement may require a higher superannuation contribution rate than the statutory 12% minimum. In that case, the award or agreement rate applies to employees covered by the instrument. Employers must ensure that their contributions satisfy both the SG obligation and any higher award or agreement obligation. Contributions made to satisfy an award or agreement requirement can be counted toward the SG liability if they are made to a complying superannuation fund.

Cross-border employer takeaway

For cross-border employers hiring their first Australian employee, the superannuation guarantee is a mandatory additional employment cost — 12% of OTE from 1 July 2025, paid on top of salary, not carved out of it. Budgeting for an Australian hire therefore requires gross salary + 12% SG + payroll tax (if applicable in the relevant state and above the state threshold). The SG contribution does not appear on the employee's payslip as a deduction; it is an employer contribution paid directly to the employee's nominated superannuation fund. The employer's obligation is administrative (fund choice, quarterly payment, Single Touch Payroll reporting) and financial (the 12% contribution and compliance with quarterly due dates). Missed or late payments trigger the SGC regime, which is costlier than timely compliance and brings the ATO into direct enforcement.

Source: Superannuation Guarantee (Administration) Act 1992 (Cth) Source: Super guarantee — Australian Taxation Office Source: How much super to pay — Australian Taxation Office