How did we get four weeks’ annual leave – and are we due a rise?


How did we get four weeks’ annual leave – and are we due a rise?

In the US, workers get two weeks’ leave a year. In Finland, they get six. If we wanted more than our four, should they be delivered as annual leave or public holidays? And what difference would it make?


From the mid-1930s to mid-1970s, Australian workers enjoyed a boom in their paid leave entitlements. Thanks to a concerted push by unions, annual leave entitlements increased on four separate occasions, rising from zero at Federation to four weeks under the Whitlam government.

But since then: nothing.

A symptom, perhaps, of the declining bargaining power of workers relative to their bosses? “Bloody oath, yes,” says economist Saul Eslake. “Clearly, the thrust of industrial relations regulation has been to tip the balance explicitly in favour of employers after having, by the 1970s, gone too far in favour of employees.”

So are workers overdue a holiday increase?

As we seek to unwind after a particularly stressful year, it’s certainly something to ponder this summer.

Economists have long studied the inherent trade-off between income and leisure, observing that, as countries and individuals get richer, they tend to prefer more leisure.

Employers are certainly keeping an eye on the issue, because even as annual leave entitlements have stalled, states and territories keep declaring more public holidays, meaning higher penalty rates for workers.


The Productivity Commission has called for a periodic national discussion about whether Australians should instead be granted more annual leave as opposed to the current proliferation of public holidays.

So, do we get enough holidays? If we want more, should they be delivered as annual leave or public holidays? And would we really be prepared to trade pay rises for more time off?

Credit:Artwork: Monique Westermann

How did we get the holidays we have?

Before 1935, Australian workers had no formal entitlement to paid annual leave. Awards for some occupations did specify some modest leave entitlements, mostly for clerical, banking and professional workers. And some jobs were granted leave owing to the unsociable nature of the jobs. Marine engineers, for example, had entitlement to two weeks of paid annual leave, on the basis that they were frequently required to be at sea on Sundays.

In a 1912 case in the Commonwealth Court of Conciliation and Arbitration, which decided on award conditions such as leave, Justice Henry Bournes Higgins observed: “The engineers are likely to work more efficiently and cheerfully if they have a brief furlough.”

It was not until 1935, when the commercial printers union successfully applied for the right to one week’s paid annual leave, that entitlements began to spread more widely.


In that decision, Justice George James Dethridge noted such leave would represent an increase in the cost of labour to employers. But he also observed this effect may be offset, to a large degree, by an increase in “vigour and zeal” exhibited by more rested employees.

In the four decades that followed that historic decision, Australians’ annual leave entitlements were increased on three more occasions.

In the closing years of World War II, unions pushed for the right to two weeks of annual leave.

In the closing years of World War II, unions pushed for the right to two weeks of annual leave, on the grounds that the previous increase – awarded in the aftermath of the Great Depression – had had no noticeable negative impact on business.

The resulting 1945 court decision in favour of granting the increase cited a report stating that: “The physical and mental health of employees, and the social need for providing ample time for the breadwinner to spend in leisure with his family, make it desirable that a minimum annual holiday of two continuous weeks, with pay, should be instituted throughout industry.”

In 1963, unions were successful again in increasing leave entitlements, this time to three weeks, again convincing the courts that previous rises had not harmed the economy.

Finally, during the early 1970s Whitlam era, when union power was at its zenith and wage inflation was rampant, unions successfully pushed to increase leave to four weeks – where it has remained ever since.


Before WorkChoices in 2006, no national legislation existed to stipulate minimum annual leave entitlements for all workers: rights were simply written into industry-level awards. Today, the National Employment Standards, created by the Rudd government to replace WorkChoices, mandates four weeks for all workers – a standard that could, in theory, be altered to grant all workers a holiday increase.

Our annual leave compares pretty favourably to the US, which has no minimum mandated paid annual leave. Permanent full-time workers in America can, however, typically get up to two weeks off, rising with their length of service. And in Canada, two weeks is the norm.

But in European countries, a five-week annual leave entitlement is more typical, including in France, Sweden and Austria. In Finland, employees who have worked for their employer for more than a year are entitled to receive six weeks of annual paid leave. “Europeans have chosen to take some of their wealth in the form of longer holidays,” says Eslake.

Credit:Artwork: Monique Westermann

But don’t we get heaps of public holidays?

Under the National Employment Standards – enshrined in Commonwealth law – Australians are also entitled to eight national public holidays: New Year’s Day, Australia Day, Good Friday, Easter Monday, Anzac Day, the Queen’s birthday, Labour Day and Christmas Day.

Due to state vagaries, Australians stop and celebrate in unison only on six of those days (the Queen’s Birthday and Labour Day differ by state).


In addition to these nationally celebrated days, each state and territory also declares its own public holidays.

Victoria, of course, has Melbourne Cup Day. The Northern Territory has its Picnic Day. South Australia has Proclamation Day. Then there’s Bank Holiday in NSW in August, which is only for bank employees. The ACT has its Family and Community Day, which a few years ago was re-labelled as Reconciliation Day.

Holidays can also vary within states. Brisbane Show Day is declared a public holiday in Brisbane but not the rest of Queensland. Regatta Day is celebrated in the southern parts of Tasmania, but not the north.

Overall, the number of public holidays in any given state in any given year fluctuates, depending on which day they fall. If a holiday falls on a Saturday or Sunday, for instance, a make-up day can be declared for the following Monday. But this changes every year.

According to a Productivity Commission review in 2015: “Some public holidays are only paid when they fall on a weekday, though in others, the paid day off switches to the closest weekday. This means that the number of paid public holidays varies by the year.”

Bob Hawke, celebrating Australia's win in he 1983 America's Cup, famously declared: “Any boss who sacks anyone for not turning up today is a bum.”

Bob Hawke, celebrating Australia's win in he 1983 America's Cup, famously declared: “Any boss who sacks anyone for not turning up today is a bum.” Credit:Archive

Could we just declare more public holidays?


In 1983, prime minister Bob Hawke famously declared an impromptu “public holiday” to celebrate Australia winning the America’s Cup. “Any boss who sacks anyone for not turning up today is a bum,” Hawke said.

State governments have certainly started a trend towards declaring more public holidays in recent years.

In 2012, South Australia invented two new half-day public holidays on Christmas Eve and New Year’s Eve. In 2015, Victoria declared the Friday before AFL grand finals as a public holiday. And in 2019, the Queensland government followed the lead of South Australia by granting a half-day public holiday from 6pm on Christmas Eve.

Public holidays, of course, attract penalty rates of pay for those who are forced to work them. As such, they’re a favourite among punters and politicians alike.

'It is about working to live, not living to work.'

Victorian Premier Daniel Andrews

Defending his decision in 2020 to grant Victorians an AFL grand final day, despite the final being played in Brisbane, Premier Daniel Andrews said: “It is about working to live, not living to work … it is a special day and we should try as best we can in this year of challenges to make it the most special day possible.”

But business is up in arms against this slow creep of inconsistent state-based holidays. The Australian Industry Group pleaded for the Queensland Government not to proceed with the Christmas Eve declaration.

“The proposed public holiday will make businesses less competitive with interstate and overseas firms,” it said.

“The inconsistency in public holidays between states is already a major problem. This proposal will make the problem worse.”

The Productivity Commission has also raised concerns about this method of granting more leisure time for workers.

“Declaring additional days as public holidays may be politically appealing but comes at significant economic costs,” it found in a 2015 review.

“A public holiday declared on a weekday will often lead to closure of an enterprise on that day, with losses in output, reduced convenience for customers, and reduced capital utilisation.”

If businesses do stay open on public holidays, wage costs can soar thanks to penalty rates.

If businesses do stay open on public holidays, wage costs can soar thanks to penalty rates, the commission found.

But there are benefits, too, to be weighed in granting workers more public holidays, the commission found, including the “genuine social benefit” of “widespread community engagement in events, especially on days of cultural or spiritual significance”.

More time with family is also a benefit: “There is … empirical evidence that more shared days of leisure enrich the relationships of people with their friends and acquaintances, which then improves the quality of leisure on other days, such as weekends.”

Although, not for everyone: “Of course, for people without available family or friends, public holidays may be an especially lonely time.”

Balancing this, the commission said public holidays, particularly long weekends, also “typically lead to significant traffic congestion and delays on roads out of/in to capital cities, as well as peaks in demand and ‘premium’ charges for other transport, accommodation and entertainment services during those periods”.


So, are we due some more paid time off? And if so, how?

According to the “income-leisure tradeoff”, economists say that the richer people and countries get, the more likely they are to opt for increased leisure than increased consumption.

It’s a phenomenon observed by the commission in its review: “Given that the demand for leisure generally rises with income, it could be expected that, over the longer term, the preferences of people would be for implicit pay rises to take the form of more annual leave rather than just more dollars.”

It even recommends a regular review of annual leave entitlements, to make sure they are in line with community expectations and to ward off the slow creep of ad hoc public holidays. “Periodically, the Australian, state and territory governments should jointly examine whether there are any grounds for extending the existing 20 days of paid annual leave in the National Employment Standards,” it says.

Eslake agrees it would certainly be better for business if paid time off was delivered as annual leave rather than public holidays, due to high penalty rates.

'Another extra day of annual leave, that would be less costly to employers than a public holiday.'

Saul Eslake, economist

“If you get another extra day of annual leave, that would be less costly to employers than a public holiday.”

Eslake thinks Australia Day should be moved to somewhere between April and November, too, to help space out the opportunities for workers to rest more evenly throughout the year. Currently, over a one-month period – from December 25 to January 26 – workers are inundated with four out of eight of their national holidays.

In a world of reduced union power and low wages growth, however, it’s likely that if employers were forced to increase paid leave entitlements, it would come at the expense of future pay rises.

So, what is really more important: more money or more time?

It’s a question modern workers might increasingly consider asking.

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