Super is paid on long service leave that you take while you are still employed, but not on unused long service leave paid out as a lump sum when your employment ends. The Australian Taxation Office treats leave taken during employment as ordinary time earnings (OTE), so the super guarantee applies at the standard rate. A termination payout is not OTE, so no super is owed on it unless your contract or industrial agreement says otherwise.1Australian Taxation Office. List of Payments That Are Ordinary Time Earnings
Long Service Leave Taken While Still Employed
Take a period of long service leave and your employer keeps paying super on it, just as they do on your normal wages. The ATO classifies long service leave taken as an absence from work as ordinary time earnings, so it attracts super guarantee contributions at the standard rate.1Australian Taxation Office. List of Payments That Are Ordinary Time Earnings The same treatment applies whether you take the leave at full pay or at half pay stretched over a longer period. The employment relationship is intact, and your retirement savings keep building.
There is one exception worth knowing about. If your long service leave is paid through a portable long service leave scheme, common in industries such as construction, cleaning, and community services, the payment is not OTE and your employer does not owe super on it.1Australian Taxation Office. List of Payments That Are Ordinary Time Earnings Portable schemes run outside the individual employer’s payroll, so the standard super guarantee rules do not attach to the payout.
Unused Long Service Leave Paid Out When You Leave
Once your employment ends, the rules change. Any unused long service leave paid out as a lump sum on termination is not ordinary time earnings, and your employer is not required to pay super on it.1Australian Taxation Office. List of Payments That Are Ordinary Time Earnings This applies regardless of why you left, whether that is resignation, redundancy, dismissal, or retirement. The ATO’s position is consistent: unused leave on termination, including long service leave, counts as salary and wages but not as OTE for super guarantee purposes.
The reasoning is that once you have stopped working for the employer, the payment is settling an accrued entitlement rather than paying you for hours worked. Your final payslip will show the gross value of your unused long service leave, but without the extra super percentage that would sit on top during regular pay cycles.
Contracts and industrial agreements can go further than the law requires. Some enterprise agreements or individual employment contracts oblige the employer to pay super on termination payouts even though the ATO does not require it. If you are heading toward the end of a job with a large long service leave balance, it is worth checking the agreement that covers your role.
Cashing Out Long Service Leave While Still Employed
Cashing out long service leave during employment is generally not permitted.2Fair Work Ombudsman. Payment of Long Service Leave Unlike annual leave, which can be cashed out in some circumstances, long service leave sits under state and territory legislation, and whether a cash-out is allowed depends on that legislation and any relevant industrial instrument. A limited number of jurisdictions and agreements permit it.
Where a cash-out is legally available and you take it, the ATO treats the payment as OTE. You are still employed, so the payment relates to your ordinary working arrangement, and super is payable on the full gross amount. Before agreeing to cash out any long service leave, both sides should confirm that the arrangement is actually permitted under the relevant state or territory law.
How Much Super Applies
Where super is owed on long service leave, the employer applies the super guarantee rate to the gross pre-tax amount of the leave payment. From 1 July 2025 the rate is 12%, and it stays at 12% through 30 June 2027.3Australian Taxation Office. Super Guarantee That is the legislated ceiling; the rate reached its final scheduled step on 1 July 2025.
Higher earners should be aware of the maximum contribution base, which caps the earnings on which an employer is obliged to pay super. For the 2025–26 financial year, the cap is $62,500 per quarter, meaning the maximum required super payment is $7,500 per quarter.3Australian Taxation Office. Super Guarantee If a long service leave payment pushes your quarterly earnings above that ceiling, your employer is not required to pay super on the excess. From 1 July 2026 the maximum contribution base becomes an annual figure of $250,000.4Australian Taxation Office. Maximum Contributions Base
When the Super Has to Land in Your Fund
Timing is changing. Until 30 June 2026, employers pay super guarantee contributions quarterly. Super for the January to March quarter, for example, must reach the employee’s fund by 28 April.5Australian Taxation Office. Super Payment Due Dates
From 1 July 2026, payday super begins. Employers must pay super guarantee contributions at the same time as salary and wages, on each payday, rather than quarterly.6Australian Taxation Office. Payday Superannuation The reform applies to super for salary and wages paid on or after 1 July 2026.5Australian Taxation Office. Super Payment Due Dates For long service leave, that means super owed on leave you take from that date has to be paid into your fund alongside the leave payment itself. Employers still processing super on wages paid before 1 July 2026 continue to use the quarterly due dates for those amounts.
If Your Employer Has Not Paid the Super They Owe
Employers who fail to pay the correct super on time are liable for the superannuation guarantee charge (SGC), which costs more than simply paying the original amount on time. The SGC has three parts:7Australian Taxation Office. The Super Guarantee Charge
- The shortfall, calculated on total salary and wages rather than just ordinary time earnings, which is usually a broader base than the original obligation.
- Nominal interest of 10% per annum, accruing from the first day of the relevant quarter.
- An administration fee of $20 per employee, per quarter.
Unlike regular super contributions, the SGC is not tax-deductible for the employer. If you believe super on long service leave you took has not been paid into your fund, you can raise it with your employer first and then report an unpaid super enquiry to the ATO. From 1 July 2026, late payment consequences will align with the new payday timing rather than quarterly deadlines.