What your final pay must include
The Fair Work Ombudsman lists these as the parts of a final pay:
- Wages owing for hours worked, including penalty rates and allowances
- Unused annual leave, including leave loading if it would have been paid during employment
- Payment in lieu of notice (if it applies)
- Redundancy pay (if it applies)
- Accrued or pro-rata long service leave (if it applies)
Sick and carer's leave is not on the list: it isn't paid out when employment ends. Most awards require the final pay within 7 days of your last day, and pay in lieu of notice must be paid on or before the termination day.
Leave loading: the rule that overrides your contract
Loading is not a universal NES entitlement. Whether you get it depends on your award, agreement or contract, and the standard award rate is 17.5%. But once you do receive loading when you take leave, it must be included when unused leave is paid out at termination, even if the award, agreement or contract says otherwise.
On 4 weeks of leave at $1,500 a week, that is the difference between $6,000 and $7,050.
Why the same leave is taxed two ways
Unused annual leave paid on termination is taxed under the ATO's Schedule 7, and the rate depends on the reason the employment ended:
- Genuine redundancy, invalidity or an approved early retirement scheme: annual leave and loading are withheld at a flat 32%, whenever the leave was accrued.
- Resignation, dismissal or retirement: leave accrued after 17 August 1993 is taxed at your marginal rate, using the ATO's method of spreading the payment across your pay periods.
For someone whose marginal rate plus Medicare is above 32%, a genuine redundancy means less withheld on the same leave. For someone on a lower income, the flat rate can mean more is withheld.
Worked example
Two people each leave after 6 years with 4 weeks of annual leave banked and a 17.5% loading. One earns $800 a week, the other $3,000. Here is the withholding on the leave payout if they are made genuinely redundant, compared with resigning:
| Weekly pay | Leave gross | Withheld: redundancy | Withheld: resignation |
|---|---|---|---|
| $800 | $3,760 | $1,203 | $693 |
| $3,000 | $14,100 | $4,512 | $5,499 |
The lower earner has more withheld on a redundancy ($1,203 against $693), because the flat rate is above their marginal rate. The higher earner has less withheld ($4,512 against $5,499).
Withholding is not the final word: the leave is included in your tax return for the year, and the amounts show on your income statement as Lump sum A or B where they get the special rates. The final pay calculator uses annual marginal rates as an approximation of the ATO's method; see the methodology for why.
No super on the payout
Unused annual leave, leave loading and long service leave paid on termination are not qualifying earnings for the super guarantee, so the 12% super guarantee doesn't apply to them. Pay in lieu of notice, by contrast, does attract super.
Frequently asked questions
Is annual leave loading paid out when I leave?
Yes, if you would have received loading when taking the leave. The Fair Work Ombudsman says it is paid out on termination even when an award, enterprise agreement or contract says it is not.
Is sick leave paid out when employment ends?
No. Sick and carer's leave isn't paid out on termination.
When should I receive my final pay?
Most awards require final pay within 7 days of your last day. Where the NES requires something sooner, such as pay in lieu of notice, the NES applies.
Is super paid on unused annual leave paid out at termination?
No. Unused annual leave, leave loading and long service leave paid on termination are not qualifying earnings, whatever the reason for termination, so no super guarantee is payable on them.
Related
- Final pay calculator — leave, notice and redundancy itemised
- Notice periods and pay in lieu
- How redundancy is taxed
Sources
Figures on this page come from the following primary sources. The date is when we last checked the page against the source.
- Final pay (Fair Work Ombudsman), checked 24 September 2026.
- Payment for annual leave (Fair Work Ombudsman), checked 7 August 2026.
- Schedule 7: tax table for unused leave payments on termination (ATO), checked 7 August 2026.
- What payments are qualifying earnings (ATO), checked 24 September 2026.
- Employment termination payments for employees (ATO), checked 24 September 2026.
- Tax rates for Australian residents (ATO), checked 17 September 2026.
Independent guide — not a government service, and not financial, legal or tax advice.