Payroll Q&A – Superannuation guarantee: payment in lieu of notice


We have a case where an employee is terminating employment and our organisation (the Council) is paying the employee XX* weeks’ pay in lieu of notice.

According to SGR 2009/2, payments in lieu of notice are considered ordinary time earnings (OTE) (see paragraph 38). Therefore, super would be payable because the payments are equivalent to the salary or wages the employee would have earned during the notice period.

For the purposes of the maximum contribution base and determining whether earnings are over the quarterly threshold of $54,030, would the OTE from the payment in lieu of notice be considered:

  • income over the XX week period that the wages would have been earned in had they continued working for the Council i.e. spread over two quarters; or
  • income all in the quarter that the payment is made to the terminating employee?

Subscribers Only! Click here to become a member of TaxEd.

Disclaimer: This article is based upon information available as at the time of publishing and may be subject to change.