Super while an employee is on leave¶

When an employee takes leave, whether you owe super on that leave depends on one question: is the leave paid while they are still employed? Paid leave taken during employment is treated the same as ordinary pay for super. Unpaid leave usually is not, because there are no earnings to pay super on.

There is also a separate, newer rule for the government's Paid Parental Leave, where the government, not you, pays the super.

In one line

Paid leave taken while employed attracts super; unpaid leave usually does not; and from 01/07/2025 the government pays super on government Paid Parental Leave.

Why this matters¶

Getting leave wrong is an easy way to underpay or overpay super. If you skip super on paid annual leave, you underpay. If you try to pay super on unpaid leave, you overpay. Knowing the simple rule keeps each pay run correct.

What you will learn¶

Why paid leave taken while employed attracts super
Why unpaid leave usually has no super
How the government super on Paid Parental Leave works

Understanding the concept¶

Super is worked out on an employee's ordinary time earnings (often shortened to OTE). OTE is broadly what you pay an employee for their ordinary hours of work.

The ATO lists paid leave taken while a person is still employed as ordinary time earnings. This covers paid annual leave, paid sick or personal leave, and paid long service leave taken during employment. Because these count as OTE, you pay super on them just like normal pay.

Unpaid leave is different. If an employee is on unpaid leave, there are no earnings for that time, so generally there is no super to pay for it.

Note the important difference between paid leave taken during employment (covered here) and leave paid out when someone leaves the job. Unused leave paid out on termination is treated differently. That is covered in the terminations lesson.

Paid Parental Leave (government-funded) is a special case. The ATO explains that for a child born or adopted from 01/07/2025, where a parent receives government Parental Leave Pay, the government will pay a super contribution on that Parental Leave Pay. This is the Paid Parental Leave Superannuation Contribution. It is paid by the government, not by you as the employer, and it is worked out and paid separately from your normal payroll.

For accountants & bookkeepers

The ATO includes paid leave taken while employed (annual, sick and long service leave) in its list of payments that are ordinary time earnings, so super guarantee applies. The government Paid Parental Leave Superannuation Contribution is administered by the ATO: it is based on the super guarantee rate, includes an interest component, is paid as a lump sum after the end of the financial year, and is separate from any employer super. Employer-funded parental leave you choose to pay is a separate matter from the government contribution.

Example¶

Mia is a full-time employee. She takes two weeks of paid annual leave while still employed. Because paid leave taken during employment is ordinary time earnings, her employer pays super on that annual leave pay, just as if she had worked.

Later, Mia goes on parental leave. She takes a period of unpaid leave from her employer and receives government Parental Leave Pay for her child born after 01/07/2025. Her employer does not pay super on the unpaid leave, because there are no earnings for that time. Separately, because the child was born after 01/07/2025, the government will pay a super contribution on the government Parental Leave Pay Mia received. That government contribution is handled by the ATO, not by Mia's employer.

Common mistakes¶

Skipping super on paid annual, sick or long service leave taken while employed — it is ordinary time earnings, so super applies.
Trying to pay super on unpaid leave — usually there are no earnings, so no super.
Assuming the employer must pay super on government Paid Parental Leave — the government pays that contribution, not the employer.
Confusing paid leave taken during employment with unused leave paid out at termination, which is treated differently.

How this works in myaccountant¶

In the app — when you run a pay run that includes paid leave taken while an employee is still employed, such as paid annual, sick or long service leave, myaccountant works out the super on that paid leave along with the rest of ordinary time earnings. The government Paid Parental Leave super contribution is arranged by the government through the ATO and is not something you pay through a myaccountant pay run.

Key points¶

Paid leave taken while employed is ordinary time earnings, so super applies.
Paid annual leave, paid sick or personal leave, and paid long service leave all attract super when taken during employment.
Unpaid leave usually has no super, because there are no earnings.
From 01/07/2025 the government pays super on government Paid Parental Leave.
That government contribution is paid by the government, not by the employer.
Leave paid out at termination is treated differently (see the terminations lesson).

Learn next¶

General information only — not tax, super or financial advice.

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