Superannuation on termination pay: which payments attract super
Some parts of a final pay attract super and others do not. Enter the components to see what your employer must contribute.
Superannuation guarantee is charged on ordinary time earnings, at 12% since 1 July 2025, and a final pay mixes payments that are ordinary time earnings with payments that are not. Wages for work up to the last day and payment in lieu of notice are ordinary time earnings, so super is payable on them. Lump sums paid on termination for unused annual leave, unused long service leave and unused sick leave are excluded, and so are redundancy pay and ex gratia payments. On a final pay made up of $3,000 of wages, $6,500 of notice in lieu, $9,000 of leave and $16,000 of redundancy pay, super is due on $9,500 only: $1,140. An enterprise agreement or contract can require more than the legal minimum. From 1 July 2026 super must be paid with each pay rather than quarterly.
Super owed on your final pay
Super the employer must pay
$1,140
| Ordinary time earnings | $9,500 |
| Rate | 12 % |
| Payments with no super | $25,000 |
Updated on · Radif Partners · Editorial policy
Component by component
| Payment | Ordinary time earnings? | Super guarantee |
|---|---|---|
| Wages for hours worked to the last day | Yes | 12% |
| Payment in lieu of notice | Yes | 12% |
| Annual leave taken before the last day | Yes | 12% |
| Annual leave loading on leave taken | Yes, unless shown to replace overtime | 12% |
| Unused annual leave paid out on termination | No | None |
| Unused long service leave paid out on termination | No | None |
| Unused sick leave paid out under an agreement | No | None |
| Redundancy pay | No | None |
| Ex gratia or settlement payment | No | None |
The table follows the Australian Taxation Office’s list of payments that are and are not ordinary time earnings. The line that surprises most people is the second: payment in lieu of notice counts, because it stands in for wages that would have been earned during the notice period.
Super on notice in lieu: examples
| Salary | Service | Final week of wages | Notice in lieu | Super due on both |
|---|---|---|---|---|
| $60,000 | 2 years | $1,154 | $2,308 | $415 |
| $85,000 | 4 years | $1,635 | $4,904 | $785 |
| $110,000 | 6 years | $2,115 | $8,462 | $1,269 |
| $150,000 | 10 years | $2,885 | $11,538 | $1,731 |
Notice is taken at the minimum of the National Employment Standards for an employee under 45. Employers who pay notice in lieu through payroll as an employment termination payment sometimes omit the super; the ETP label determines the tax, not the super.
Why leave paid out is excluded
The superannuation guarantee legislation defines ordinary time earnings as earnings in respect of ordinary hours of work, and then removes two things by name: lump sum payments on termination for unused annual leave and for unused long service leave. The ATO’s ruling on the subject extends the same treatment to unused sick leave. Leave that is taken while employment continues is simply pay for ordinary hours. The practical consequence is that an employee with a large leave balance and the freedom to choose their last day receives more super by taking the leave than by being paid out.
On $85,000 a year, four weeks of annual leave is worth $6,538. Taken, it brings $785 of super. Paid out, it brings none.
The maximum contribution base
An employer need not pay super guarantee on earnings above the maximum contribution base for a quarter, a figure indexed each July. A large payment in lieu of notice in the same quarter as high regular earnings can therefore attract super on only part of it. With annual pay well under that level the base has no effect.
Agreements, contracts and salary packages
The legal minimum can be exceeded. Some enterprise agreements require super on all termination payments, including leave. A contract that expresses remuneration as a total package inclusive of super raises a different question: whether the leave payout is calculated on the package or on the cash component. The usual reading is that leave is paid at the rate of the cash salary the employee would have received while on leave, with super then payable or not according to the rules above.
Payday super and the final pay
Until 30 June 2026, employers had until 28 days after the end of each quarter to pay super guarantee. From 1 July 2026 the obligation moves to payday: the contribution is due with each payment of ordinary time earnings and must reach the fund within a short period. For a departing employee this means the super on final wages and notice should appear in the fund within days, not months, and a missing contribution is visible quickly through the ATO’s online services.
Putting more of a payout into super yourself
A redundancy or termination payment cannot be directed into super by the employer as a rollover, but you can make a personal contribution from the after-tax amount. Up to the concessional cap, less what your employer has contributed during the year and plus any unused cap carried forward from the previous five years if your balance is under $500,000, the contribution can be claimed as a deduction. Since a termination payment often lifts taxable income for the year, the deduction can be worth more than usual. The tax-free limit and ETP guide covers the tax on the payment itself.
Checking your own figures
Take the final payslip and separate the lines into two groups, using the table above. Multiply the first group by 12%. Compare the result with the super shown on the payslip and, a week or two later, with the contribution recorded by your fund. A shortfall on the notice in lieu is the error to look for. The final pay calculator shows what each line should be before super is considered.