Are employees entitled to super when "cashing out" annual leave?
Under certain circumstances, employees may wish to “cash out” 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 included any super payments they would have been entitled to.
Therefore, when “cashing out” annual leave, you are required to pay super contributions as normal.
KeyPay makes it really easy to cash out annual leave and ensure you’re meeting your obligations.
Simple steps to cash out annual leave for an employee:
- The first thing you need to do is create a new payrun and find the employee that wants to cash out their leave
- Next you need to make sure you apply the leave to the employee’s record. To do this, click the “Actions –> Take Leave”
And fill out the leave line. It might also be a good idea to make a note that the employee is cashing out annual leave.
- Once you’ve applied the leave, you then need to create a corresponding earnings line by clicking “Actions –> 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.
And that’s it. Once you’ve added the leave and earnings line to the employee’s pay run, KeyPay will work out the correct super and PAYG amounts for you.
More information on cashing out Annual Leave can be found here.