Why Do Leave Entitlements Confuse So Many Australian Businesses?

Leave entitlements confuse many employers because terms like leave accrual and leave loading sound similar but mean different things. Misunderstanding these terms leads to payroll errors, compliance risks, and employee disputes. Understanding the difference saves money and builds employee trust.

What is Payroll Tax?

Payroll tax is a state-based tax imposed on businesses when their total wages exceed a certain threshold. It’s calculated on wages paid to employees, including salaries, superannuation, allowances, bonuses, and some contractor payments.

Leave loading is an additional payment made to employees when they take annual leave, intended to compensate for the potential loss of income from not receiving regular overtime or penalty rates during their time off.