Annual Leave Accrual While on Leave: Does Leave Accumulate During Absences?

Published: January 2026 | Reading time: 9 minutes

When you're away from work on various types of leave, you might wonder whether your annual leave balance continues to grow. The answer depends on the type of leave you're taking and whether it's paid or unpaid. Understanding how annual leave accrues during different absences helps you plan effectively and know exactly what entitlements to expect when you return to work.

This guide explains the accrual rules for annual leave during the most common types of absence from work, helping you understand how your leave balance will be affected by time away from the workplace.

The Basic Principle: Paid Leave Accrues Annual Leave

The fundamental rule in Australian employment law is that annual leave accrues based on ordinary hours of work. When you're being paid for your ordinary hours, whether you're at the workplace or not, annual leave continues to accrue. When you're on unpaid leave, accrual typically stops because you're not being paid for ordinary hours.

This principle applies consistently across different leave types. If your employer is paying you your normal wages, you're accruing annual leave. If you're not receiving wages, you're not accruing leave. Some specific situations have nuanced rules that we'll explore below, but this fundamental principle guides most cases.

Use our annual leave calculator to understand your baseline accrual rate. This helps you estimate how different periods of absence will affect your overall leave balance.

Annual Leave While Taking Annual Leave

Perhaps surprisingly, annual leave accrues while you're on annual leave. When you take a two-week holiday using your annual leave entitlement, you're being paid your normal wages for that period. Because you're receiving ordinary pay, annual leave continues to accrue during your time off.

This means that every time you take annual leave, you're also building up a small amount of additional leave for the future. Over a year of full-time work, you accrue four weeks of leave. Taking those four weeks as holidays doesn't reduce the accrual rate. You still earn the full four weeks over the year while enjoying the time you've already accrued.

This continuous accrual during annual leave is one reason why long-term employees can build substantial leave balances even while taking regular holidays. The system is designed to ensure that using your leave doesn't penalize your future entitlements.

Personal Leave and Sick Leave

Personal leave, commonly called sick leave or carer's leave, is paid leave under the National Employment Standards. When you're off work using paid personal leave, annual leave continues to accrue because you're receiving your ordinary wages. A week off sick doesn't reduce your annual leave accrual.

This protection is important because it ensures employees aren't financially disadvantaged by illness. If annual leave didn't accrue during sick leave, employees might feel pressured to work while unwell to protect their holiday entitlements. The accrual rules support both employee health and fair treatment.

Note that personal leave itself doesn't accrue during other types of leave in the same way annual leave does. The specific accrual rules differ between leave types, so annual leave accruing during personal leave doesn't necessarily mean the reverse applies.

Workers Compensation Leave

When you're off work due to a workplace injury and receiving workers compensation payments, the situation regarding annual leave accrual is more complex and depends on your specific circumstances and state legislation.

Generally, workers compensation payments are made by the insurer rather than as wages from your employer. Because you're not receiving ordinary wages from your employer, annual leave typically doesn't accrue during workers compensation periods. However, some enterprise agreements or state regulations may provide for continued accrual in certain circumstances.

The interaction between workers compensation and annual leave entitlements varies by jurisdiction and situation. If you're on extended workers compensation leave, seek specific advice about your annual leave accrual. Your employer's HR department, the workers compensation insurer, or a union representative can clarify what applies in your case.

Parental Leave

Parental leave includes a mix of paid and unpaid periods, and annual leave accrual follows the payment pattern. During any portion of parental leave where your employer is paying you at your normal rate, annual leave accrues. During unpaid parental leave periods, accrual stops.

The government's Parental Leave Pay scheme provides payments at the national minimum wage, but these come from Services Australia rather than your employer. Because these aren't employer wages, they don't trigger annual leave accrual. Only periods of employer-paid parental leave contribute to your annual leave balance.

If you're planning parental leave, understanding how the paid and unpaid portions affect your annual leave helps with financial planning. You might return from parental leave with less accrued annual leave than expected if most of your absence was unpaid.

Long Service Leave

Long service leave is paid leave, so annual leave accrues while you're taking it. If you take an extended period of long service leave after many years of employment, your annual leave balance continues to grow during that time off.

This can result in employees returning from long service leave with more annual leave than when they started, particularly for longer periods of absence. It's another example of how paid leave types interact to support employee entitlements over time.

Unpaid Leave

When you take unpaid leave, whether approved personal reasons, study leave, or other forms of unpaid absence, annual leave does not accrue. Without ordinary wages being paid, there's no basis for leave accrual.

Before taking extended unpaid leave, consider how this will affect your annual leave balance. If you're planning a significant unpaid absence, understand that your leave accrual will pause for that period. You won't lose any leave you've already accrued, but you won't gain additional leave during the unpaid time.

Some employees take unpaid leave specifically because they've exhausted their paid leave entitlements. In these situations, understanding that annual leave won't accrue helps set realistic expectations about leave availability when you return.

Community Service Leave and Jury Duty

Community service leave, including jury duty, has specific rules under the National Employment Standards. For jury duty, you're generally entitled to make-up pay from your employer to bring jury payments up to your normal wage level. Because you receive your ordinary wages during jury service, annual leave accrues.

Other forms of community service leave, such as voluntary emergency management activities, may or may not be paid depending on your employer's policies and any applicable award provisions. Where paid, annual leave accrues. Where unpaid, it doesn't.

Calculating Accrual During Mixed Leave Periods

Sometimes absence from work involves multiple types of leave. You might take some annual leave, then personal leave for illness, then return to work. Each type of leave affects accrual according to its own rules, but since both are paid, annual leave accrues throughout.

More complex situations arise with parental leave that includes paid employer leave, unpaid leave, and periods receiving government Parental Leave Pay. In these cases, only the employer-paid portions contribute to annual leave accrual.

Your employer's payroll system should correctly calculate accrual based on your actual pay and leave status. If you've had complex leave arrangements, verify your leave balance when you return to ensure it's been calculated correctly. Our annual leave calculator provides a baseline comparison for checking employer calculations.

Conclusion

Annual leave accrues during paid periods of absence but not during unpaid leave. This simple principle applies to most leave types: if you're receiving your ordinary wages, your annual leave balance continues to grow. Personal leave, annual leave itself, and long service leave all continue accrual. Unpaid leave, including most parental leave periods, does not.

Understanding these rules helps you plan leave strategically and know what balance to expect when returning from various types of absence. Use our free annual leave calculator to understand your standard accrual rate and estimate how different leave patterns affect your entitlements.

If you're facing an extended absence from work and are unsure how your annual leave will be affected, ask your employer for clarification. Complex situations involving workers compensation, parental leave, or combinations of leave types may require specific advice based on your circumstances and applicable agreements.