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Superannuation liability on genuine redundancy payment where payment is wholly for lieu of notice.

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Employee with less than 12 months service was terminated due to bona fide redundancy (Covid related).

 

Subsequently paid out 4 weeks payment in lieu of notice (per the terms of his employment contract).

 

Per the ATO guidelines here the payment in lieu of notice can be included in a genuine redundancy payment.

 

Payment was made to the employee based on it being a genuine redundancy payment and therefore tax free up to the relevant limit.  This is therefore not assessable income to the employee.

 

Per the SGR 2009/2 here, redundancy payments do not form part of Ordinary Times Earnings (OTE) and therefore do not attract SG.

 

However also per SGR 2009/2 payment in lieu of notice do form part of Ordinary Times Earning and therefore do attract SG.

 

Is this payment considered a redundancy payment OR time in lieu of notice under superannuation legislation?

 

Thanks,

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Most helpful response

ATO Community Support

Replies 2

Hi @Payroll_Query,

 

Thank you for reaching out to us. If the employee received a redundancy payment the in lieu of notice component will still attract Super Guarantee (SG). You can view the SG table for employers on our website via this link. When the SG is paid on time you will use the OTE (right hand column). The SG is not paid on Unused Annual leave or Unused Long service leave. 

 

Hope this helps.

 

Regards,

Jodie2  

3 REPLIES 3

Most helpful response

ATO Community Support

Replies 2

Hi @Payroll_Query,

 

Thank you for reaching out to us. If the employee received a redundancy payment the in lieu of notice component will still attract Super Guarantee (SG). You can view the SG table for employers on our website via this link. When the SG is paid on time you will use the OTE (right hand column). The SG is not paid on Unused Annual leave or Unused Long service leave. 

 

Hope this helps.

 

Regards,

Jodie2  

I'm new

Replies 1

Hello 

If the payment is for time in lieu of redeployment (not the normal 4 weeks in lieu of notice) ... it forms part of an enterprise agreement ... its like a lump sum if they choose to take it rather than sit for 10 weeks for re-depoyment to hopefully occur.  Would this not be classified part of the redundancy lump sum and not OTE?

 

Many thanks :-)

ATO Community Support

Replies 0

Hi @CandiCurtin,

 

Thank you for your reply. If it isn't recognised on the Super Guarantee table then you can write to superadvice@ato.gov.au

 

Hope this helps.

 

Regards,

Jodie2.