Paid Leave and Public Holidays Contractors Forget to Price

Why this decision is easy to misread

Employees keep receiving salary during annual leave, personal leave and most public holidays. Contractors usually do not invoice when they are not delivering work. The financial gap is created by fewer billable days, not by a separate invoice labelled “leave”.

The cleanest method is to reduce annual billable capacity before dividing the revenue target. Adding a leave loading to the rate can also work, but using both methods for the same days double counts the cost.

A financial comparison cannot decide whether a worker is legally an employee or contractor. The real relationship, control, risk, ability to delegate, provision of tools, method of payment and other factors can matter. Use the numbers to compare commercial value, then use Fair Work and professional advice for classification questions.

Contracting also changes timing. Revenue can arrive late, GST may need to be remitted, tax is not automatically withheld and super may need to be funded personally. A rate that looks generous before those cash movements can be weak after them.

The calculation, step by step

Annual leave

Four weeks away removes roughly 20 weekday billing opportunities for a five-day contractor.

In the calculator, this item should be entered separately so a change in annual leave can be tested without hiding it inside another assumption. Keeping the input visible also makes later reviews and comparisons more reliable.

Public holidays

The number that affects a contractor depends on location, client closure and whether work can be shifted to another day.

In the calculator, this item should be entered separately so a change in public holidays can be tested without hiding it inside another assumption. Keeping the input visible also makes later reviews and comparisons more reliable.

Personal leave

Illness and caring responsibilities are unpredictable, so use a realistic annual allowance rather than zero.

In the calculator, this item should be entered separately so a change in personal leave can be tested without hiding it inside another assumption. Keeping the input visible also makes later reviews and comparisons more reliable.

Shutdowns

Many clients close over Christmas or pause projects at financial year-end. Those gaps can exceed the contractor’s chosen leave.

In the calculator, this item should be entered separately so a change in shutdowns can be tested without hiding it inside another assumption. Keeping the input visible also makes later reviews and comparisons more reliable.

Professional development

Training, compliance and conferences may be necessary but not directly billable.

In the calculator, this item should be entered separately so a change in professional development can be tested without hiding it inside another assumption. Keeping the input visible also makes later reviews and comparisons more reliable.

Worked Australian example

A contractor who expects to work 46 weeks does not automatically have 46 fully billable weeks. Ten public holidays, five sick days and 15% administration can reduce invoiceable capacity to well below 1,500 hours.

If the annual revenue target is $140,000, dividing by 1,950 hours gives $71.79 per hour. Dividing by 1,350 realistic billable hours gives $103.70. The lower quote does not become viable because the calendar was optimistic.

Decision checklist

Use the calculator with this guide

Open Contractor Rate vs Employee Salary Calculator Australia

Build the employee side from base salary, employer super and paid time, then build the contractor side from billable capacity, business costs and personally funded benefits.

Use the linked calculator for paid leave and public holidays contractors forget to price with a documented base case. Save the output, then create a conservative case using the most uncertain input from the worked example.

The useful break-even point is the contractor rate that replaces the employee package without assuming every working hour can be invoiced. Record that threshold beside the headline result; it is often the clearest way to judge whether the decision has enough margin for error.

Common mistakes

• Counting public holidays as billable by default.
• Assuming sick leave will be zero.
• Forgetting sales and administration days.
• Adding a leave percentage after already reducing billable weeks.
• Using a full-time employee calendar for a project pipeline.

Questions to answer before acting

• List every planned and likely non-billable day.
• Check client shutdown periods before signing.
• Use actual utilisation from invoices where available.
• Price urgent work and weekend access separately.
• Recalculate when the engagement changes from project to ad hoc work.

Where paid leave and public holidays contractors forget to price depends on law, tax, eligibility, lending policy or a contract, verify the applicable rule with the official source. The calculator measures the consequence of the input; it does not establish that the input legally applies.

Record keeping and review

For this calculation, retain the evidence behind annual leave and public holidays. Label each number as confirmed, quoted, estimated or stress-tested, and date the evidence so a later comparison does not silently mix figures from different periods.

Official sources

The sources below were selected for Paid Leave and Public Holidays Contractors Forget to Price because they define the relevant measurement, rule or evidence base. Recheck dated rates, thresholds and official guidance before acting.

• Fair Work — Independent contractors
• ATO — Registering for GST
• ATO — Super guarantee

Related guides

• Contractor Rate vs Salary in Australia: The Real ComparisonCompare contracting revenue with an employee package after super, leave, expenses, administration and risk.
• How Much Should Australian Contractors Set Aside for Tax and Super?Build a contractor cash reserve for income tax, GST, super and irregular expenses without confusing turnover with spendable income.
• Hourly Rate vs Day Rate vs Project Fee for Australian ContractorsChoose between hourly, day and project pricing by matching the pricing model to scope, risk and client value.
• Australian Contractor Expenses Checklist: What to Include in Your RateBuild a complete annual expense allowance before quoting contractor work in Australia.

Frequently asked questions

Sensitivity check before acting

Stress-test billable weeks, non-billable time and annual business expenses. Those three inputs usually move the required contractor rate more than small changes to the headline salary. Run a base case, a realistic low-utilisation case and a high-cost case before accepting a rate.

For Paid Leave and Public Holidays Contractors Forget to Price, keep the base, conservative and stress cases together. The decision is stronger when it survives a realistic adverse change rather than depending on one precise forecast.

Bottom line

Price leave by using realistic billable capacity; pretending every weekday earns revenue is the fastest way to underquote.