Is super paid on long service leave?

Learn more about whether super is paid on long service leave and what impact it could have on your superannuation.

When you give an employer several years of dedicated service in Australia, you’re rewarded with long service leave—and the great news is you’re generally paid super on this leave entitlement too.

But it’s not a one size fits all. Generally, you will be eligible to receive super guarantee (SG) contributions if you take long service leave during your employment because it counts as ordinary time earnings (OTE).

However, you won’t be eligible to receive SG contributions on long service leave if you choose to take the unused long service leave as a lump sum payment when your employment finishes.

Understanding long service leave

Long service leave is an entitlement provided by federal legislation that affords an employee a period of absence based on their long service to an employer. However, the period of ‘long service’ can differ between states and territories—usually, it’s a minimum of either seven or 10 years. For example, you could be entitled to long service leave after seven years with an employer in Victoria or Western Australia, and 10 years in New South Wales and Queensland.

Similarly, other long service leave entitlements may differ from state to state—this includes things like progressive accrual and leave loading. You may want to check the details of your employment contract or with your employer to see what you could be entitled to.

What happens when you take long service leave as a lump sum payment?

You can take any unused long service leave as a lump sum at the end of your employment, but you should consider your personal circumstances before deciding what to do.

Whether you take long service leave as a lump sum or not can have an impact on your super. You won’t receive SG contributions if you take unused long service leave as a lump sum payment as this isn’t considered to be part of OTE, and employers aren’t obligated to pay super on this amount. This means you could miss out on at least 11.5% of your OTE for the 2024-25 financial year—increasing to 12% for the 2025-26 financial year.

It’s also important to consider the tax implications of taking unused long service leave as a lump sum. Head to the ATO website for more information on tax treatment of unused long service leave payments.

Ways to grow your super

If you do decide to take your unused long service leave as a lump sum payment at the end of your employment, you could consider putting some of it towards your super. Regardless of where you are in your career, putting even a little bit extra away now could make a difference later.

Voluntary after-tax contributions

One way you could make the most of your unused long service leave lump sum is with after-tax contributions, which you can make as a one-off or recurring payment. You might also be able to claim a tax deduction on these contributions. It’s important to consider the contribution caps for the relevant financial year or you may need to pay extra tax.

Learn more about after-tax contributions

Spouse contributions

This type of after-tax contribution allows you to contribute to your partner’s super, and can be a good idea if they’re taking time out of the workforce. Making these contributions could bring about a number of benefits, including a tax offset of up to $540 each year if you and your partner meet eligibility requirements. After-tax contributions rules apply to spouse contributions.

Learn more about spouse super contributions

Salary sacrifice contributions

You could also consider salary sacrificing, which you can set up with your employer. This before-tax contribution would see a portion of your unused long service leave lump sum go towards your super after the salary sacrifice agreement is in place. These are taxed at 15%, which is generally lower than income tax unless your taxable income is below the tax-free threshold. It’s important to consider the contribution caps for the relevant financial year or you may need to pay extra tax.

Learn more about salary sacrifice contributions

More like this

You might also be interested in:

Super on paid parental leave
Read about how you can stay on track for a great retirement when you start or grow your family.
Your super when you change jobs
A common question we see is: what happens to my super when I change jobs? We sat down with UniSuper financial adviser Sam Dignam to get the facts.
Your super when your working situation changes
Wondering what happens to your super when your working situation changes?
  • The information is of a general nature and doesn’t consider your personal circumstances. Before making decisions, you should consider whether the information is appropriate for your circumstances otherwise seek financial advice.

X
Cookies help us improve your website experience.
By using our website, you agree to our use of cookies.
Confirm