Q1.. We have a full-time employee who has been given approval to have 1 week’s annual leave cashed out as per our enterprise agreement. Do we need to pay super on the cash-out of annual leave?
A.. Yes, the cash-out of leave is liable for super as it is considered Ordinary Time Earnings.
Q2.. We have an employee who has resigned and will not be working her notice (we will be paying in-lieu of notice) – do we accrue the leave entitlements up to her last working day in the office or to the end of the notice period?
A.. Under the Fair Work rules you only need to accrue leave up to the last working day. Some companies are more generous and accrue to the end of the notice period, but there is no legal requirement to do so.
Q3.. We have an employee who has worked for less than a year and is being made redundant. The company have decide to pay one week of severance pay. Is this employee entitled to Lump Sum D?
A.. Where the position is genuinely redundant and the employee has less than one completed year of service they would be entitled to a tax free amount (lump sum D) up to a maximum of $9,514.
Q4.. I have had an enquiry from a staff member requesting that her SG be split between 2 super funds. Is splitting of SG allowed under the relevant legislation? Or is it up to the discretion of the employer?
A.. The employer is only required to pay super into one fund. If the employer wishes to permit a second fund, there is no problem splitting super between two funds. However, both funds should belong to the same employee – if you make payment into their spouses fund for example there would be an FBT liability.
Q5.. We have an employee who has just reached the age of 75. Do we still have an obligation to pay super? Is the employee allowed to salary sacrifice to super?
A.. The employer must contribute super guarantee for all employees, there is no longer an age where the employer obligations cease in this regard. However, once an employee turns 75 there can be no additional super paid to the fund, i.e. the employee cannot salary sacrifice or pay after tax super.