How to Set Up Leave Entitlements in Odoo

Australia's National Employment Standards (NES) provide minimum leave entitlements for all full-time and part-time employees. Casual employees receive limited leave entitlements. This guide covers how to configure all statutory leave types in Odoo, including accrual methods, leave loading, and payout rules.

Australian leave entitlements at a glance

• Annual leave — 4 weeks (20 days) per year for full-time. Pro-rata for part-time. Some awards provide 5 weeks for shift workers.
• Personal/carer's leave (sick leave) — 10 days per year for full-time. Pro-rata for part-time. Accumulates year to year with no cap.
• Compassionate/bereavement leave — 2 days per occasion.
• Family and domestic violence leave — 10 days per year (paid, from 1 Feb 2023).
• Long service leave — State-based. Typically 8.67 weeks after 10 years of continuous service. Some states allow pro-rata access after 7 years.
• Parental leave — 12 months unpaid (NES minimum). Government-funded paid parental leave (PPL) of up to 20 weeks is separate.
• Community service leave — Unpaid (except for jury duty, which is paid for the first 10 days minus jury fees).

Step 1: Configure leave types

Set up each leave type in Odoo:

• Go to Time Off → Configuration → Leave Types
• Create or verify these leave types exist:

• Annual Leave — Allocation type: Accrual. Accrual rate: 20 days per 12 months (full-time). Approval required: Yes.
• Personal/Carer's Leave — Allocation type: Accrual. Accrual rate: 10 days per 12 months. Approval required: Yes.
• Long Service Leave — Allocation type: Accrual or manual. State-dependent rules. Approval required: Yes.
• Compassionate Leave — Allocation type: No allocation (request-based). Maximum: 2 days per request.
• Unpaid Leave — No allocation. Deducts from pay.
• Family & Domestic Violence Leave — Allocation type: Fixed. 10 days per year.
• Parental Leave (Unpaid) — No allocation needed, request-based up to 12 months.

Step 2: Set up accrual plans

Odoo supports automatic leave accrual. Configure accrual plans for annual and personal leave:

• Go to Time Off → Configuration → Accrual Plans
• Create an accrual plan for Annual Leave (Full-Time): accrue 1.5385 hours per week (= 20 days ÷ 52 weeks × 4 hours, or use 0.3846 days/week)
• Create an accrual plan for Annual Leave (Part-Time): pro-rata based on contracted hours. A 3-day/week employee accrues 12 days/year.
• Create an accrual plan for Personal Leave (Full-Time): accrue 0.1923 days per week (= 10 days ÷ 52 weeks)
• Set the accrual start date to the employee's start date
• Annual leave accrues from day one, including during probation

Step 3: Annual leave loading

Many awards provide a 17.5% annual leave loading on top of the employee's base rate when they take annual leave:

• Check your applicable award — most modern awards include the 17.5% loading, but the calculation method varies
• Some awards pay leave loading when leave is taken, others pay it as a lump sum in December
• In Odoo, create a salary rule: Annual Leave Loading = Base Rate × 0.175 × Leave Hours Taken
• The loading applies to annual leave only — not personal leave, long service leave, or other leave types
• Some awards apply a "better off" test: the employee gets the higher of the leave loading OR the penalty/shift rates they would have earned

Step 4: Configure long service leave

Long service leave is governed by state/territory legislation, not federal law. The rules vary:

• NSW — 2 months (8.67 weeks) after 10 years. Pro-rata after 5 years (on termination).
• VIC — 8.67 weeks after 10 years (was 15 years, reduced from 2018). Pro-rata after 7 years.
• QLD — 8.67 weeks after 10 years. Pro-rata after 7 years.
• WA — 8.67 weeks after 10 years. Pro-rata on termination after 7 years.
• SA — 13 weeks after 10 years. Pro-rata after 7 years.
• TAS — 8.67 weeks after 10 years. Pro-rata on termination after 7 years.
• NT — 13 weeks after 10 years.
• ACT — 6.07 weeks after 7 years.

To configure in Odoo:

• Create a Long Service Leave type with the appropriate accrual rate for your state
• Example (NSW): 8.67 weeks ÷ 10 years = 0.867 weeks/year = 0.01667 weeks/week = approximately 0.633 hours/week (based on 38-hour week)
• Set a vesting period — leave isn't accessible until the qualifying period (e.g., 10 years in NSW)
• For pro-rata entitlements on termination, Odoo calculates accrued balance at the termination date

Step 5: Leave balances for payslips

When an employee takes leave, the payslip must correctly:

• Pay the employee at their normal rate (or base rate + leave loading for annual leave)
• Reduce their leave balance accordingly
• Record the leave payment in the correct general ledger accounts
• Report the leave payment correctly in STP (paid leave is reported separately under STP Phase 2)

Verify the integration between Odoo Time Off and Payroll:

• Approved leave requests should automatically create Work Entries for the leave period
• Payslip generation should pick up these Work Entries and calculate pay accordingly
• Test by creating a leave request, approving it, generating a payslip, and verifying the amounts

Step 6: Leave payout on termination

When an employee leaves, you must pay out:

• Accrued annual leave — All untaken annual leave must be paid out, including leave loading if applicable under the award
• Long service leave — If the employee has reached the pro-rata threshold, pay out the accrued entitlement
• Personal/carer's leave — NOT paid out on termination. The balance is forfeited.
• Leave in advance — If the employee has taken more annual leave than accrued, you can deduct the overpayment from their final pay (with written agreement)

Step 7: Public holidays

Configure public holidays so leave calculations and penalty rates are correct:

• Go to Time Off → Configuration → Public Holidays
• Add all national public holidays: New Year's Day, Australia Day, Good Friday, Easter Saturday, Easter Monday, Anzac Day, Queen's Birthday (state-dependent date), Christmas Day, Boxing Day
• Add state-specific public holidays (e.g., Melbourne Cup Day in VIC metro, Royal Queensland Show in QLD)
• Public holidays must be updated each year as dates change (Easter, Queen's Birthday)
• Employees on leave during a public holiday are not charged a leave day for that day

Leave management best practices

• Review leave balances quarterly — excessive annual leave accrual is a financial liability
• Many awards allow you to direct employees to take excessive leave (typically over 8 weeks accrued)
• Keep leave records for 7 years (general retention period)
• Document any leave loading agreements or salary packaging arrangements
• Set up manager approval workflows in Odoo so leave requests go through the proper chain