How Much Super Do You Actually Get on a Redundancy Payout?

You have been made redundant at 59. The letter quotes a figure — say $150,000 — and somewhere in the fog of the next fortnight you do a piece of mental arithmetic that feels safe. Super is 12%. So roughly $18,000 of that lands in the fund, on top of the cash.

It does not. Usually it is a small fraction of that, and the gap is not a rounding error.

This matters more than it sounds, because a redundancy at 59 is the moment a retirement projection gets rebuilt from scratch — often in a hurry, often on the back of an envelope. Starting that rebuild with a super figure that is several thousand dollars too high sets the whole thing off course, in the direction that hurts. Here is what actually attracts super guarantee, and what doesn't.

The rule underneath it

Super guarantee is not calculated on "your payout." It is calculated on a defined set of earnings — and payments made in consequence of the termination of your employment are generally not part of that set (ATO, https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-much-super-to-pay/list-of-payments-that-are-ordinary-time-earnings, as at August 2026).

That is the whole principle. A redundancy payout is mostly compensation for losing the job, not payment for working. Super attaches to the second thing, not the first.

What does attract super

Ordinary wages for hours you actually worked up to your last day. Unremarkable, but worth stating — this is real, and it is often the larger of the two components for someone with a short notice period.

Payment in lieu of notice. This is the one almost nobody expects, and it is the single most useful thing in this article. Awards and agreements often provide that instead of giving you notice, the employer may simply pay you an amount equivalent to the ordinary time rate of earnings you would have earned during the notice period. Because it stands in for wages you would have been paid for ordinary hours, it is ordinary time earnings — and super guarantee is payable on it. If you were given four weeks' pay instead of four weeks' notice, that four weeks carries super.

What does not attract super

The genuine redundancy payment itself. The severance component — the part calculated on your years of service — carries no super guarantee.

Unused annual leave paid out on termination. This one is not a matter of interpretation: a lump sum paid on termination for unused annual leave is specifically excluded from the ordinary time earnings definition (ATO, https://www.ato.gov.au/businesses-and-organisations/super-for-employers/quarterly-super-to-30-june-2026/how-much-super-to-pay/list-of-payments-that-are-ordinary-time-earnings/payments-that-are-not-ordinary-time-earnings). It is still salary or wages for other purposes, and it is still taxed — but no super is payable on it.

Unused long service leave paid out on termination. Same position. Employment termination payments and unused leave payments do not form part of ordinary time earnings or qualifying earnings, so no super guarantee is calculated on those amounts (ATO, https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/engaging-a-worker/when-a-worker-leaves-your-business).

For a long-serving employee this is the sting. Two decades of accrued long service leave can be one of the largest single lines on the final payslip, and it is one of the lines that carries no super at all.

The ATO's own worked example

This is published by the ATO and it is worth reading twice. An employee's job is made redundant. The employer pays a total of $40,000, which includes $10,000 as payment in lieu of notice for four weeks of wages. Out of the total payment of $40,000, only the $10,000 payment in lieu of notice is qualifying earnings.

Super is payable on a quarter of the payout. Not on $40,000 — on $10,000. At 12%, that is $1,200 rather than the $4,800 the intuitive calculation produces.

The proportions in your own case will differ, sometimes dramatically. Someone with a long notice period and little accrued leave will see a much higher share carry super; someone with twenty years of long service leave and a payment made without notice may see almost none of it carry super. The point is not the ratio — it is that the ratio exists at all, and that you cannot know yours without reading the breakdown.

What changed on 1 July 2026 — and what didn't

If you go looking for this online you will hit two sets of ATO pages using different vocabulary, and it is genuinely confusing. Here is the reconciliation.

Payday Super commenced on 1 July 2026. Employers now pay super guarantee each payday instead of quarterly, and calculate it on "qualifying earnings" — a new term that brings together ordinary time earnings and certain other payments (ATO, https://www.ato.gov.au/businesses-and-organisations/super-for-employers/about-payday-super). The rate is 12% of qualifying earnings. The day the earnings are paid is called the QE day, and a contribution is on time if it is received by your super fund within 7 business days after you are paid (ATO, https://www.ato.gov.au/businesses-and-organisations/super-for-employers/payday-super/paying-super-on-payday/payment-deadlines-for-payday-super).

What did not change is the answer to this article's question. All employee payments that were included in super guarantee calculations up to 30 June 2026 continue to be included as qualifying earnings from 1 July 2026. The only additional payment type is commissions for work done entirely outside ordinary hours. So if you read an older page saying "ordinary time earnings" and a newer one saying "qualifying earnings," you are looking at the same treatment under a new label — the redundancy position is unchanged.

But the timing did change, and it matters to you specifically. Before 1 July 2026, your final employer contribution could sit with the employer until the quarterly deadline — potentially months after you had cleaned out your desk. Now it has to reach your fund within 7 business days of your final pay.

That is good news, with one trap attached. The contribution still arrives after your last pay, not with it. If you are about to consolidate funds, roll your balance to another fund, or commence an account-based pension, do it after the final contribution has landed — not in the week you finish up. A rollover executed too early can leave a small residual contribution stranded in a fund you thought you had closed, and a pension commenced before the last contribution arrives cannot simply absorb it afterwards. Check the balance has actually moved before you act.

Worked examples

These are illustrations, not predictions. They apply the 12% rate to stated component splits; your own payout will divide differently, and the ATO's published example above is the authoritative one.

Robert, 61, made redundant after nineteen years, given four weeks' pay in lieu of notice. His termination statement itemises four lines: two weeks of ordinary wages worked up to his last day, four weeks' pay in lieu of notice, a genuine redundancy severance amount based on nineteen years of service, and a substantial payout of accrued long service leave. On these facts only the first two lines carry super guarantee — the ordinary wages and the payment in lieu of notice. The severance amount and the long service leave, which between them are much the larger part of what he receives, carry none. What is generally rational for Robert is to ask payroll for those four lines separately in writing before he does any retirement arithmetic, because the two super-bearing lines are the only ones that tell him anything about what will reach his fund. The long service leave payout is the line most likely to mislead him: it is large, it looks like wages, and it carries no super at all.

Susan, 58, made redundant with no notice period and modest accrued leave. Her employer pays out immediately rather than working her through a notice period. Whether she receives a payment in lieu of notice is the question that decides most of her super outcome — if the award or agreement provides for it, that amount is ordinary time earnings and carries super guarantee; if she is simply terminated with a severance payment and no in-lieu component, there may be very little in her payout that attracts super beyond her final ordinary wages. On these facts what is generally rational is to check the termination statement for a payment-in-lieu-of-notice line specifically, and to query its absence with payroll rather than assume it was rolled into the severance figure. It is also the point at which the contribution question becomes the live one — see below.

One thing this article does not answer

If you are working past Age Pension age and are made redundant, whether super guarantee still applies to you is a fair question — and one we could not answer from a source clear enough to publish.

Here is precisely what we found and what we did not. The ATO's eligibility material sets out specific circumstances that change or remove the obligation: employees under 18 are eligible where they work more than 30 hours in a week; people doing private or domestic work are eligible on the same more-than-30-hours test; employers do not have to pay super guarantee for individuals covered by an SG employer shortfall exemption certificate; and there are exceptions for certain foreign executives and for employees covered by a bilateral super agreement (ATO, https://www.ato.gov.au/businesses-and-organisations/super-for-employers/work-out-if-you-have-to-pay-super). None of the exceptions we could locate is an age cut-off for older workers.

That is a description of what we found, not a conclusion. We could not retrieve a squarely-on-point ATO statement either way, so we are not going to tell you there is no upper age limit — we are telling you we looked and did not find one stated, which is a different and weaker thing. Confirm your own position with the ATO or your employer's payroll team.

What to actually do

Ask for the breakdown, in writing, before you plan around the number. Your final payslip or termination statement should itemise the payout into its components: ordinary wages, payment in lieu of notice, the genuine redundancy amount, unused annual leave, unused long service leave. You need those lines separately, not a single total. Only two of them tell you anything about super.

Then check the super actually arrives. You now have a 7-business-day yardstick to hold it against. Log into your fund a fortnight after your final pay and confirm the last contribution is there.

And then look at the lever that does exist. None of the above stops you contributing part of the payout to super yourself — that is cash in your hand, and it is subject to the ordinary contribution rules and caps rather than to super guarantee. That is a different question with a different answer, and it is where most of the actual planning opportunity in a redundancy sits. Our article Can I put my redundancy payment into super? covers it, and Made redundant in your 50s or 60s covers the tax and planning picture around the payout as a whole.

If the redundancy has left you looking at income support before Age Pension age, the payout has its own Centrelink consequences — our article on the Centrelink Income Maintenance Period explains how a redundancy and leave payout can delay JobSeeker eligibility.

The number in the letter is not the number that reaches your super. Find out which parts of it do before you build a retirement plan on top of it.

Sources

• ATO — List of payments that are ordinary time earnings
• ATO — Payments that are not ordinary time earnings
• ATO — When a worker leaves your business
• ATO — What payments are qualifying earnings
• ATO — About Payday Super
• ATO — Payment deadlines for Payday Super
• ATO — Work out if you have to pay super
• ATO — Maximum contribution base
• ATO — SGR 2009/2: Superannuation guarantee: meaning of "ordinary time earnings"