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Payroll – Explain Annual Leave Loading and how to do the bookkeeping for it?
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Published on Tuesday, 13 May 2014 17:08
Client Bianca asked - Are you able to explain to me what ‘Annual LEAVE LOADINGS’ are and how we do the payroll bookkeeping for it?
Our Building Design organisation has sent me an email this morning advising:
Annual Leave Loading
Members will be aware that employee draftspersons are covered under the Manufacturing and Associated Industries Award 2010. As you gear up for preparing holiday pay for your employee draftspersons, we remind you that this award includes a 17.5% annual leave loading as part of the employment conditions for permanent employees covered under the Award. Members who have any queries about this Award or its provisions should contact Fair Work Australia on 1300 799 675, Monday-Friday, between the hours of 9am-5pm.
Can you please help me with what I have to do with annual leave??
Answer - Leave Loading is paid WHEN an employee takes Annual Leave/Holiday, is 17.5% of the gross annual leave amount (usually the normal wage for the week) ON TOP OF the gross annual leave. Tax is calculated and taken out automatically by most payroll accounting software such as MYOB and Reckon/Quickbooks. So the employees get more for their holidays, 17.5% more pay.
Many awards have it – it started back in World War 2 times, and was to allow for the average overtime workers did on normal weeks, so they would not have a drop in pay while on holiday. Many employer groups have tried to have it removed, but it’s still here 50+ years later!
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