Annual Leave During Parental Leave: How Your Entitlements Accrue

Published: January 2026 | Reading time: 10 minutes

Becoming a parent is one of life's most significant transitions, and understanding how your employment entitlements work during this period helps you plan financially and professionally. One of the most common questions expectant parents ask is whether annual leave continues to accrue while they're on parental leave. The answer depends on whether your parental leave is paid or unpaid, and this guide explains exactly how it works under Australian employment law.

Whether you're preparing for maternity leave, paternity leave, or adoption leave, knowing how your annual leave balance will be affected helps you make informed decisions about the length of leave you take and how you might use accrued leave to supplement your income during this period.

The Key Distinction: Paid vs Unpaid Parental Leave

Under the Fair Work Act 2009, annual leave accrues based on your ordinary hours of work. This creates an important distinction between paid and unpaid parental leave. When you're on paid parental leave, either through your employer's scheme or by using your accrued leave entitlements, annual leave continues to accrue. When you're on unpaid parental leave, annual leave does not accrue because you're not being paid for ordinary hours of work.

The government's Parental Leave Pay scheme provides eligible parents with payments at the national minimum wage rate. However, this government payment is not considered wages from your employer, so time spent receiving only Parental Leave Pay from Services Australia does not count toward annual leave accrual with your employer.

Many employers offer paid parental leave as part of their employment benefits package. During any period where your employer is paying you at your normal rate, annual leave continues to accrue as usual. Some employers are quite generous with paid parental leave, offering several months at full pay, during which your annual leave balance will grow just as it would during any other work period.

Understanding Your Employer's Parental Leave Policy

Before your parental leave begins, review your employer's parental leave policy carefully. Understanding exactly what's offered helps you calculate how your annual leave will be affected over the course of your leave period. Key questions to ask include how many weeks of paid leave your employer provides, whether this is at full pay or a percentage, and whether you can top up government payments with employer contributions.

Some employers allow employees to take their paid parental leave entitlement flexibly. You might receive a lump sum at the start of leave, weekly payments throughout a defined period, or the ability to spread payments over a longer timeframe at a reduced rate. How you structure these payments can affect the period during which annual leave accrues, so discuss options with your HR department.

Your enterprise agreement or employment contract may provide different or additional entitlements beyond the minimum. Some agreements specify that annual leave continues to accrue during certain periods of unpaid parental leave, which would be more generous than the standard legislative position. Always check your specific agreement.

Calculating Your Leave Accrual During Parental Leave

To understand how much annual leave you'll have when you return to work, you need to calculate accrual across different phases of your parental leave. For example, if you take 12 months of parental leave with 12 weeks paid by your employer, annual leave accrues during those 12 paid weeks but not during the remaining 40 unpaid weeks.

Use our annual leave calculator to work out what you'll have accrued by different dates. You can calculate your balance at the start of parental leave, add the accrual from any paid portion, and arrive at your expected balance when you return to work. This helps you plan whether you might need to use some annual leave during your parental leave or whether you'll have a healthy balance for future use.

Remember that any annual leave you had accrued before starting parental leave remains yours. Your existing balance doesn't disappear during parental leave. It simply stops growing during unpaid periods and resumes growing during paid periods and once you return to work.

Using Annual Leave to Extend Your Time at Home

Many parents choose to use their accrued annual leave in conjunction with parental leave to extend their total time away from work while maintaining income. There are several ways to structure this depending on your circumstances and preferences.

Some parents take their annual leave at the end of their parental leave period. After unpaid parental leave concludes, they return to their role but immediately take annual leave. This effectively extends their time at home while receiving full pay. This approach allows you to ease back into work knowing you have that leave balance available if needed.

Others prefer to take annual leave at the start, using it to top up government Parental Leave Pay to their normal salary level during the early weeks. This provides higher income during the initial period when expenses related to a new baby might be highest. Discuss with your employer whether this arrangement is possible under their policies.

You can also request to take annual leave during your parental leave period, though your employer must agree to this arrangement. Taking annual leave during parental leave means you receive annual leave pay for those days, and annual leave accrues during that period as well, since you're being paid.

Returning to Work and Your Leave Balance

When you return to work after parental leave, annual leave immediately begins accruing again at your normal rate. If you return to reduced hours under a flexible working arrangement, your accrual rate will be proportionally reduced to match your new part-time hours, just as it would be for any part-time employee.

Your employer should provide you with an accurate leave balance when you return. If you've been away for an extended period, verify this balance carefully. Ensure they've correctly accounted for any paid parental leave period where annual leave should have accrued, and check that your pre-existing balance has been preserved throughout your absence.

Some employers will provide a leave balance statement as part of your return-to-work process. If this isn't automatically provided, request it. Knowing exactly where you stand helps you plan for any leave you might want to take in the coming months as you settle back into work while managing new parenting responsibilities.

Special Circumstances and Variations

Certain situations create variations in how annual leave and parental leave interact. If you have a premature birth or pregnancy complications, you may need to start parental leave earlier than planned, affecting how much annual leave you've accrued beforehand. The Fair Work Act provides protections for these circumstances, allowing flexibility in when parental leave can commence.

If you don't return to work after parental leave, perhaps because you decide to resign and become a full-time parent, all accrued annual leave must be paid out as part of your final entitlements. This includes leave accrued before parental leave and during any paid parental leave period.

Stillbirth and infant death tragically occur for some families. If this happens, you remain entitled to unpaid parental leave if you've already started it, and your annual leave balance continues to be protected. The Fair Work Act recognises these devastating circumstances and maintains your employment protections during this time.

Planning Ahead for Parental Leave

If you're planning to have children in the future, consider how your annual leave strategy might support your parental leave. Building up a larger leave balance before parental leave gives you more options for extending your paid time at home or provides a financial buffer for after your return.

Discuss timing with your employer well in advance. Some workplaces have busy seasons where taking extended leave is particularly disruptive, and advance planning allows for better coverage arrangements. Being proactive about these conversations also gives you time to understand all your entitlements and plan your finances accordingly.

Consider speaking with colleagues who have recently taken parental leave to understand how the process worked practically at your workplace. Their insights can help you navigate the administrative requirements and understand any unofficial practices that might benefit you.

Conclusion

Annual leave continues to accrue during paid parental leave but pauses during unpaid parental leave. Understanding this distinction helps you plan your finances and make informed decisions about how long to take off and whether to supplement parental leave with annual leave. Your accrued annual leave before parental leave is protected and remains available for your use when you return to work.

Before your parental leave begins, use our annual leave calculator to understand your current balance and project what you'll have at various points during and after your leave. This information is valuable for financial planning during one of life's most significant transitions.

Parental leave is a protected workplace right designed to help families during the important early period with a new child. Annual leave is a separate but complementary entitlement that can work together with parental leave to support your family's needs. Understanding both helps you maximise the benefits available to you as an Australian employee and parent.