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Are employees entitled to super when cashing out annual leave?

Under certain circumstances, employees may wish to cash out their annual leave. In these scenarios, the law is very clear that employees are required to be paid the full amount that they would otherwise have been paid. This includes any super payments they would have been entitled to.

Therefore, when cashing out annual leave, employers are required to pay super contributions as normal.

Employment Hero makes it really easy to cash out annual leave and ensure you’re meeting any obligations. To cash out annual leave for an employee follow these simple steps:

Step One:

Create a new pay run and find the employee that wants to cash out their leave

Step Two:

Next, apply the leave to the employee’s record. To do this, click “Actions -> Take Leave”

take leave

Don’t forget to fill out the leave line. It might also be a good idea to make a note that the employee is cashing out annual leave.

leave taken

Step Three:

Create a corresponding earnings line by clicking “Actions à Add Earnings” and filling out the earnings line that has been added. When doing this, make sure you enter the hours that correspond to the number of annual leave hours the employee wishes to cash out

cashing out 10 hours of leave

And that’s it! Once you’ve added the leave and earnings line to the employee’s pay run, Employment Hero will work out the correct super and PAYG amounts for you.

More information on cashing out annual leave can be found here.

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