The new rule can now allow you to automate the comparison calculation of annual leave.
Definitiv compares Annual Leave Loading against shift and weekend penalty rates over the whole leave application, rather than day by day, so employees always receive the correct higher-of amount for the full period of leave taken.
Many Modern Awards require Annual Leave Loading to be paid at the higher of 17.5% or the shift/weekend penalty rates the employee would have earned had they worked. Definitiv previously performed this comparison on a daily basis. This has been updated to compare the two methods across the entire leave application, in line with Fair Work Ombudsman guidance. Public holidays that fall within the leave period are excluded from both sides of the comparison.
Key Benefits:
Automatic comparison between the calculations.
Calculation breakdown of the comparison in the payrun for the entire leave application.
Reduces the risk of under or overpayment
Getting Started
Prerequisites
Before you can use the Higher of Comparison, your system administrator must configure the relevant Add Pay Item rules in the award policy.
For System Administrators:
Access to Award Policy configuration.
Understanding of which Modern Award clauses in your organisation carry a higher-of leave loading provision.
Knowledge of which Add Pay Item rules currently produce the 17.5% leave loading and the shift/weekend penalty-based leave loading.
A designated pay item (or payout rule) to receive the higher-of result, if you want the shift-penalty-based amount paid separately.
For Payroll Officers:
No additional permissions required.
The higher-of comparison is applied automatically once configured in the award policy.
No change to how leave applications are entered or approved.
Note: The Leave Loading Higher of Comparison is an optional enhancement that must be explicitly enabled per Add Pay Item rule in your award policy configuration. Existing calculations continue to work unchanged unless it is enabled.
Understanding the change
The Problem with Daily Comparison
Where a Modern Award requires the higher of 17.5% loading or shift/weekend penalty rates, the comparison must be made over the entire period of leave taken, not for each day in isolation. A day-by-day comparison can produce a different, and incorrect, result compared to comparing the totals for the whole leave application.
Example: Daily vs Period-Based Comparison
Day | 17.5% Loading | Penalty-Based Loading | Daily "Higher Of" |
Monday | $28.00 | $32.00 | Penalty ($32.00) |
Tuesday | $28.00 | $20.00 | 17.5% ($28.00) |
Wednesday | $28.00 | $22.00 | 17.5% ($28.00) |
Total (daily method) |
|
| $88.00 |
Total (period method) | $84.00 | $74.00 | 17.5% ($84.00) |
Comparing day by day produces $88.00 by mixing the higher result from each day. Comparing the totals for the whole leave application, as required, produces $84.00. Definitiv now always uses the period-based method.
Public Holidays Within a Leave Period
Annual leave generally cannot be taken on a public holiday and leave loading does not apply to those days. If configured to exclude, any public holiday falling within a leave application is excluded from both the 17.5% total and the penalty-based total before the comparison is made.
How the Higher of Comparison Works
Definitiv identifies the full unique leave application taken by the employee, including where it spans multiple pay periods.
Public holidays that fall within the leave period are excluded from the calculation.
The system calculates the total 17.5% loading amount for the whole leave application.
The system calculates the total shift/weekend penalty-based loading amount for the whole leave application, using the rates the employee would have received had they worked.
The two totals are compared, and the higher of the two is applied for the entire leave application.
Where the penalty-based amount is higher, the result can be directed to a different pay item to the standard 17.5% loading pay item, where this has been configured.
Which Leave This Applies To
Applies to leave taken during employment.
Applies to the full leave application even where it spans multiple pay periods.
Does not apply to annual leave paid out on termination. There is currently no leave loading calculation performed on termination payouts, and this enhancement does not change that.
Configuring the Higher of Comparison in Award Policies
The Higher of Comparison is enabled by adding the relevant condition to the Add Pay Item rules that produce your 17.5% and penalty-based leave loading amounts.
Navigate to Payroll, Award Policies.
Select the award policy you wish to configure.
Locate the Add Pay Item rules used for the 17.5% leave loading and the shift/weekend penalty-based leave loading.
Remove all existing rules.
Add the Higher of Comparison conditions. All conditions must be nested underneath each other.
Higher Earnings Basis of Leave Application is Leave Loading*
Nest the conditions in which to process the calculation.
Example
Leave loading name is free text but this name has been preloaded for ease
Add the Higher of Comparison condition for the Shift Penalty Calculation
Higher Earnings Basis of Leave Application is Shift Penalties*
Nest the conditions in which to process the calculation
Shift Penalties name is free text but this name has been preloaded for ease
You can use either the same Add Pay item for both conditions or separate
6. Save the award policy.
How Pay Runs Use the Higher of Comparison
Automatic Application
Once configured, the higher of comparison is applied automatically whenever a leave application is processed in a pay run. No additional steps are required by payroll officers.
During pay run calculation:
The system processes the leave application through the applicable Add Pay Item rules.
Both the 17.5% and penalty-based totals are calculated for the full leave application.
The higher of the two totals is applied.
The result is paid to the configured pay item.
Reviewing the Result
When reviewing a pay run, you can confirm which method was used by:
Opening the pay run.
Reviewing the employee's pay details for the leave application.
Checking the leave loading pay item and, where a separate pay item has been configured for the penalty-based result, confirming which one was used.
Current Scope and Limitations
It does not apply to annual leave paid out on termination.
It does not produce a retrospective recalculation report of pay runs processed before this enhancement was enabled. Any remediation for historical pay runs remains a decision for your organisation.
It does not change leave loading for awards that only pay a flat 17.5%, with no higher-of provision. These are unaffected.
It does not change how public holidays are classified or managed outside of this calculation.
Backward Compatibility
Existing Award Policies
Implementation of the Higher of Comparison does not affect existing award policies that do not have the condition configured.
Key points:
Existing leave loading calculations continue to work unchanged.
The Higher of Comparison must be explicitly added to the relevant Add Pay Item rules for each award policy.
There is a clear distinction between policies with and without the condition configured.
No existing functionality is broken by this enhancement.
Migration Considerations
If you want to add the Higher of Comparison to an existing award policy:
Review your current award policy for any higher-of leave loading provision.
Identify the Add Pay Item rules currently producing the 17.5% and penalty-based amounts.
Cease the current version of your award (recommended to align with a pay period end date).
Create a new version of your award (recommended to align with a pay period start date).
Add the Higher of Comparison condition to the relevant rules.
Test the updated policy in a non-production environment.
Deploy the change during a suitable pay period transition.
Important: Enabling this feature may change the leave loading result for employees who take leave during a period with mixed higher and lower penalty days. Review and communicate any changes to affected employees as required.
Troubleshooting
Higher of Comparison Not Applying
Problem:
Leave loading is still being calculated per day rather than for the whole leave application.
Solution:
Verify the Higher of Comparison condition has been added to both the 17.5% and penalty-based Add Pay Item rules.
Confirm the leave application is a single, unbroken period. Two separate applications entered back-to-back are treated as two periods.
Check that public holidays within the leave period are correctly configured in your award policy.
Result Paid to the Wrong Pay Item
Problem:
The penalty-based leave loading result is not appearing on the expected pay item.
Solution:
Confirm the target pay item is configured on the relevant Add Pay Item rule.
Check whether a payout rule is also directing the result elsewhere.
Frequently Asked Questions
Q: Does the Higher of Comparison apply automatically to all awards?
A: No. It must be explicitly configured on each award policy. Only awards with the condition configured will use the period-based comparison.
Q: Why did the leave loading amount change for some employees?
A: Previously, the comparison was done day by day. Comparing the whole leave application, as required, can produce a different total to adding up each day's higher result. This is typically a reduction in the amount paid, correcting a previous overpayment.
Q: Can I use a different pay item for the penalty-based result?
A: Yes, where the penalty-based amount is higher, it can be directed to a different pay item to the standard 17.5% loading pay item, if configured.
Q: Does this apply to leave paid out on termination?
A: No. There is no leave loading calculation performed on termination payouts, and this enhancement does not change that.
Q: Is this available on award rule actions other than Add Pay Item?
A: Yes. The Higher of Comparison condition is available on both Add Pay Item and Add Pay Item per Tag actions.
Q: Will this recalculate historical pay runs?
A: No. This enhancement applies going forward only. It does not produce a retrospective recalculation report or automatically remediate historical pay runs.
Q: What happens if the leave application spans multiple pay periods?
A: The comparison is still made across the whole leave application, not per pay period.
Getting Help
If you experience issues or have questions about the Leave Loading Higher of Comparison:
Review this guide for configuration and troubleshooting information.
Contact your system administrator for award policy configuration questions.
Check which Add Pay Item rules in your award policy produce your leave loading amounts.
Contact support if you need assistance with configuration or calculations; log into MyAccess online and ask a question.
Summary
Annual Leave Loading higher-of comparisons (17.5% vs shift/weekend penalty rates) are now compared over the whole leave application, not day by day.
Public holidays within the leave period are excluded from both sides of the comparison.
Does not apply to annual leave paid out on termination.
Must be explicitly configured on the relevant Add Pay Item rules; existing policies are unaffected until configured.
No retrospective recalculation or automatic remediation of historical pay runs is provided.