Casual annual leave entitlements are a major source of employer confusion — and much of what employers read online is wrong. The correct position is simple: casual employees do not accrue paid annual leave. What casuals get instead is a 25% loading on every hour worked, paid in lieu of leave entitlements.

The real risk runs the other way. If a ‘casual’ actually works regular, ongoing hours with a reasonable expectation of continued employment, they may be a permanent employee in law — and you can owe backpaid annual leave, leave loading and other entitlements, plus Fair Work Ombudsman penalties. Getting the classification right is what protects you.

Here’s exactly what casual employees ARE and AREN’T entitled to, straight from the National Employment Standards (NES).

Casual Annual Leave Entitlements: What Employers Must Know

No. Casual employees are not entitled to paid annual leave under the Fair Work Act 2009. The NES annual leave entitlement in section 87 covers full-time and part-time employees (4 weeks per year) — casual employees do not accrue any.

Instead, casuals are paid a 25% casual loading on every hour they work. This loading is paid in lieu of the leave and termination entitlements permanent staff receive — that’s why it exists.

Important: The 25% casual loading is mandatory under the National Minimum Wage Order and most modern awards. If you’re not paying it, you’re breaking the law — even if the casual hasn’t complained yet.

What Is Casual Loading? How It Replaces Annual Leave

Casual loading is a percentage increase on top of a casual employee’s hourly rate. It compensates them for:

• Not receiving paid annual leave
• Not receiving paid sick leave
• The uncertainty of future work (no guaranteed hours)
• No notice of termination or redundancy pay entitlements

Example: A casual customer service worker earns $25/hour. With 25% casual loading, they earn $31.25/hour. This is the minimum — their modern award or contract may set a higher loading.

The loading is calculated as follows:

Casual hourly rate (with loading) = Base rate × 1.25

When a casual employee finishes their employment, they don’t get a lump-sum payout for unused annual leave (like permanent employees do). Instead, the loading they’ve been paid throughout their employment is considered compensation for that leave.

How Casuals Get Access to Paid Annual Leave: Conversion

Genuine casuals cannot take paid annual leave — there is no accrued balance to draw on. The path to paid annual leave is conversion to permanent employment.

Under the National Employment Standards, a casual who has been employed for 12 months — and over the last 6 months has worked regular and systematic hours with a reasonable expectation of continuing employment — can request conversion to full-time or part-time employment. Employers with 15 or more employees must respond in writing within 21 days and can refuse only on reasonable grounds after genuine discussion. Small business employers (fewer than 15 employees) are exempt from this NES obligation, though their modern award may still allow conversion requests.

Once a casual converts, they accrue annual leave from the conversion date. Their earlier casual service doesn’t create a backdated leave liability, but it can count toward other entitlements like long service leave.

What Casuals CAN’T Get (Even Though They’re Legally Entitled)

Despite being employees, casual workers do NOT receive:

• Paid sick leave (personal/carer’s leave): Casuals don’t get the 10 days of paid personal/carer’s leave that permanent staff receive. They get unpaid carer’s leave instead (2 days per occasion).
• Paid long service leave: Casuals don’t accrue long service leave in the same way. This varies by state and their award.
• Paid compassionate leave: Casuals get 2 days unpaid compassionate leave per occasion (not 2 paid days like permanent staff).

What Casuals DO Get Under the NES

Casual employees receive most — but not all — National Employment Standards (NES) entitlements, including:

• No paid annual leave: the 25% casual loading is paid in lieu of annual leave, paid personal/carer’s leave, notice of termination and redundancy pay
• Paid family and domestic violence leave: 10 days paid leave per year for family and domestic violence (same as permanent staff)
• 2 days unpaid carer’s leave per occasion (not annual — as needed)
• 2 days unpaid compassionate leave per occasion
• Jury duty: Entitled to be absent (same as all employees)
• Volunteer emergency service leave: Unpaid leave for volunteer firefighters and SES workers
• Public holiday loading: If a casual works on a public holiday, they get the public holiday rate (1.5× base rate, or higher depending on the award) PLUS their 25% casual loading

The Modern Awards Twist: Some Casuals Get LESS Loading

The 25% casual loading is the minimum required by the Fair Work Act. BUT modern awards can set a HIGHER loading for specific industries.

Common variations:

• Hospitality: Often 25–30% casual loading
• Aged care: 25% loading + additional entitlements in some awards
• Retail: Usually 25%, but some awards specify higher rates
• Security: Often 30% loading

Action for employers: Check your employees’ modern award or registered enterprise agreement. If the award says 30% loading, you must pay 30%, not the 25% minimum.

Casual Conversion After 12 Months of Regular Hours

Once a casual has worked regular and systematic hours for 12 months, they can request conversion to permanent employment. Here’s how it works:

Step 1: The casual requests conversion to full-time or part-time employment (a written request is best practice).

Step 2: If you have 15 or more employees, you must respond in writing within 21 days. You can refuse only on reasonable grounds — such as a significant change to the employee’s hours or the position no longer being available — after discussing it with the casual first.

Step 3: If the request is granted, the employee converts and starts accruing annual leave, personal/carer’s leave and other permanent entitlements from the conversion date.

Example: A casual has worked a regular pattern of 16 hours per week for 14 months. They request conversion to part-time employment. You assess the request, grant it, and from the conversion date they accrue paid annual leave and personal/carer’s leave on a pro-rata basis — the same 16 hours per week.

What Happens When a Casual Leaves — No Annual Leave Payout

When a genuine casual finishes employment, there is no payout for unused annual leave — a casual never accrued any. The 25% loading paid on every hour worked was the compensation for that entitlement.

The exception — misclassification: if the Fair Work Commission or Fair Work Ombudsman finds the person was actually a permanent employee (regular, ongoing hours with an advance commitment to continued work), you owe backpay of the annual leave accrued across the misclassified period, plus leave loading, on top of any underpayment penalties. A long-term ‘casual’ working regular 20-hour weeks for 2 years is the classic audit trigger — get advice before terminating them.

Superannuation and Casuals — A Separate Entitlement

Casual employees are entitled to superannuation contributions, just like permanent staff. Employers must pay 12% of ordinary time earnings into the casual’s superannuation fund (the Superannuation Guarantee rate since 1 July 2025).

Important: Superannuation contributions are separate from casual loading. The 25% loading does NOT cover super.

State-Specific Rules: Long Service Leave for Casuals

Long service leave rules for casual employees vary by state:

• NSW, Victoria, Queensland, WA, SA, NT: Casuals aren’t entitled to long service leave under the National System. However, some modern awards provide it.
• Tasmania: State-based long service leave may apply to some casuals.

Always check your modern award — some industry awards (aged care, healthcare) provide pro-rata long service leave for casuals.

Common Employer Mistakes (and How to Avoid Them)

Mistake 1: Not paying casual loading. You must pay 25% (or higher per the award). If you don’t and the casual complains, the Fair Work Commission can order back-pay.

Mistake 2: Ignoring casual conversion requests. Once a casual has worked 12 months of regular hours (and you have 15+ employees), they can request permanent employment — and you must respond in writing within 21 days.

Mistake 3: Ignoring records of regular hours. If a casual works consistent shifts (even if not full-time), document them carefully. Those records decide conversion disputes — and misclassification claims where a ‘casual’ is found to be permanent and owed backdated leave.

Mistake 4: Assuming a long-term regular casual is still a casual. If their pattern looks permanent (regular ongoing hours, expectation of continued work), the FWO or FWC may treat them as permanent — owing backdated annual leave, loading and other entitlements.

Mistake 5: Not checking the modern award for higher loading. Just because 25% is the minimum doesn’t mean it’s what you owe. Some awards require 30% or more.

Practical Checklist: Casual Leave Compliance

For more guidance on employer obligations, see our guides on HR best practice and National Employment Standards.

• ☐ Check the casual employee’s modern award. What’s the minimum casual loading required?
• ☐ Confirm you’re paying at least 25% loading on all casual wages. (More if the award says so.)
• ☐ Keep detailed records of when the casual started and their ordinary hours each week.
• ☐ After 12 months of regular hours, be ready for a casual conversion request (if you have 15+ employees).
• ☐ Respond to any conversion request in writing within 21 days; refuse only on reasonable grounds.
• ☐ Remember: genuine casuals accrue no annual leave — there is no leave payout on exit, but audit for misclassification risk.
• ☐ When the casual leaves, no annual leave payout is owed for a genuine casual — the 25% loading already covered it.
• ☐ Don’t forget superannuation — 12% minimum, paid separately from casual loading.

For official guidance, refer to the Fair Work Ombudsman’s National Employment Standards page and the Fair Work Act 2009.

Key Takeaway

Casual employees do not accrue paid annual leave — the mandatory 25% casual loading (higher under many awards) is paid in lieu. A long-term casual who wants paid annual leave must convert to permanent employment, which they can request after 12 months of regular and systematic hours. On exit, a genuine casual is owed no leave payout. The real exposure is misclassification: treat a de facto permanent employee as a casual and you’ll owe backdated leave, loading and Fair Work penalties.

Get it wrong, and it’s underpayment claims, unfair dismissal liability, and backpay with interest. Get it right, and casual leave is straightforward.