Allowances can generally be separated into six broad categories: 

 

1. Expense-based

These cover costs employees incur while doing their job. Common examples include:

  • Travel allowance – working away from usual workplace

  • Car/motor vehicle allowance – using own vehicle for work

  • Meal allowance – overtime or travel meals

  • Tool allowance – wear and tear on personal tools

  • Clothing/uniform allowance – cost of uniforms

  • Laundry allowance – cleaning work clothing

 

2. Work-related (disability or conditions) allowances

These recognise how or where work is performed. Common examples include:

  • Dirty work allowance – unusually dirty conditions

  • Confined space allowance – cramped or restricted areas

  • Wet places allowance – exposure to water/saturation

  • Hot places allowance – high temperatures

  • Height allowance – working at heights

  • Insulation allowance – working with hazardous materials

These compensate for unpleasant, hazardous or demanding conditions.

 

3. Skill or responsibility allowances

These are paid when employees take on additional duties or responsibilities. Common examples include:

  • Leading hand allowance – supervising other employees

  • First aid allowance – appointed first aid responsibilities

  • Special skills allowances – extra competencies required

 These recognise higher responsibility without changing classification.

 

4. Location-based allowances

These apply when employees work in specific locations. Common examples include:

  • District allowance – working in remote or high-cost areas

  • Site allowance – specific project or worksite

  • Distant work allowance – working away from normal location

  • Living away from home allowance (LAFHA) – long-term relocation

These compensate for geographic or environmental factors.

 

5. Time and hours-related allowances (loadings)

These relate to when work is performed. Common examples include:

  • Shift allowances/loadings – afternoon, night or weekend work

  • Overtime meal allowance – extended hours requiring meals

These recognise non-standard working hours or disruption.

 

6. All-purpose allowances

These are included in calculations for overtime, penalty rates and leave payments (annual leave, personal leave, public holidays). Examples (award-dependent) include industry allowance, tool allowance and leading hand allowance. 

 

Other specialised allowances

Some industries include additional allowances such as:

  • Camping allowance – working where accommodation isn’t available

  • Multi-storey allowance – construction work at different heights

  • Follow-the-job allowance – frequent movement between sites

  • Special rates – extreme or unusual working conditions

 

Practical tip for employers

Always check the relevant modern award or enterprise agreement because:

  • the type of allowance,

  • amount, and

  • how it applies can vary significantly between industrie