Final pay when staff leave: planning the cash hit

The resignation that turns into a cash-flow item

A long-serving team member hands in their notice — or retires, or a role is made redundant. Beyond the people side, there’s a practical question most small employers don’t think about until the week it’s due: how much is the final pay, and when does it have to be paid?

For someone who has worked for you for years and hasn’t taken much leave, the answer can be surprising. Unused annual leave with loading, perhaps long service leave, perhaps notice or redundancy pay — it can add up to many times a normal pay. And it’s usually due within days.

What goes into final pay?

The Fair Work Ombudsman lists what final pay covers:

Component	Always?	Notes
Wages owing for hours worked	Yes	Including penalty rates and allowances
Unused annual leave	Yes, if any	Paid out with leave loading if it would have been paid during employment
Payment in lieu of notice	Depends	Where notice isn’t worked
Redundancy pay	Depends	Where the role is made redundant and it applies
Long service leave	Depends	Accrued or pro rata, under state or territory rules
Sick and carer’s leave	No	Not paid out when employment ends

Two details catch employers out. First, the Fair Work Ombudsman says annual leave loading is paid out on termination even when an award, enterprise agreement or contract says it isn’t. Second, full-time employees accrue four weeks of annual leave a year under the National Employment Standards — so someone who has rarely taken holidays can have a large balance.

For the exact figures, including tax, super and long service leave rules for your state, talk to your payroll provider or accountant.

How quickly does it have to be paid?

The Fair Work Ombudsman says most awards require employers to pay final pay within 7 days after the employee’s last day. Where there’s no award or agreement setting the timing, the minimum is that employees are paid at least monthly — but the Ombudsman’s guidance is to pay final pay promptly, ideally in the next pay cycle, without unreasonable delay.

Super needs attention too. Under Payday Super, which started on 1 July 2026, super on qualifying earnings must reach the employee’s fund within 7 business days of payment. Ask your payroll provider which parts of the final pay attract super — the rules differ between components — so the super deadline doesn’t catch you by surprise. See our page on late super guarantee.

How do you plan the cash?

The moment you know someone is leaving, run the numbers. Don’t wait for the last day.

1. Calculate the full final pay with your payroll software or provider, including leave, loading and any other components.
2. Add super and PAYG withholding. Withheld tax is reported and paid with your BAS, but it’s still part of the cost.
3. Place it on your cash map in the week it’s due, alongside normal payroll, suppliers and tax.
4. Check for clusters. Several departures at once — a restructure, a closure, a seasonal wind-down — can multiply the figure.
5. Decide how to fund it if the week goes negative.

Our business bill calendar makes step three easy, and how much to borrow helps size any gap.

When does funding make sense?

Final pay is a hard deadline with real people on the other end, so it deserves the same treatment as a pay run. Funding is worth considering when:

• a long-serving employee’s payout lands in the same week as normal payroll;
• several people leave together, for example after losing a major customer;
• the payout collides with a BAS, insurance renewal or supplier run;
• you’d rather keep cash reserves intact while the business adjusts.

Unsecured and cash-flow options typically run from $5,000 to $500,000 for trading businesses, sized on turnover and bank statements, with same-day funding possible for smaller amounts. Property-secured loans run from $20,000 to $5,000,000; $20k to $250k is possible same day. When you know the number and the date, the enquiry takes about a minute.

An illustrative example

Illustrative only. A family-owned engineering workshop’s production manager retires after 19 years. He’s accrued 11 weeks of annual leave and is entitled to long service leave under the state’s rules. The payroll provider calculates a final pay of $78,000 before tax — against a normal fortnightly payroll of $65,000 for the whole team. It’s due within seven days of his last day, which falls two days before the regular pay run and a week before the July–September BAS.

The owner sees the cluster three weeks ahead on the cash map. Rather than stretch suppliers or delay the BAS, the business arranges unsecured funding sized on its turnover, pays the final pay on time, and repays the facility over the following months from normal trading.

How can you avoid a big final-pay surprise?

• Track leave balances monthly. Your payroll software can show total leave liability; watch it grow.
• Encourage people to take leave. It’s better for them and smooths the cost over the year. Talk to your adviser about the rules for directing leave during shutdowns.
• Know your long service leave exposure for staff approaching eligibility under your state’s scheme.
• Put a provision aside for leave liability in a separate account, especially for long-serving staff.
• Plan succession early, so departures are known months ahead rather than days.

What if several people leave at once?

Restructures, closures and seasonal wind-downs can mean several final pays in the same week — and sometimes redundancy pay as well. The principles are the same, but the numbers multiply quickly. Before announcing any change:

• Calculate every final pay with your payroll provider, including leave, loading, notice and any redundancy entitlements.
• Check the timing under each employee’s award or agreement — most require payment within 7 days of the last day.
• Add super and PAYG withholding for each payment.
• Map the total against the weeks it falls in, alongside ongoing payroll for the staff who remain.
• Get advice on your obligations for consultation, notice and redundancy before decisions are final.

It’s far better to know the total cost before the conversation with staff than to discover it on the last day. If the numbers show a gap, arrange funding before the announcement so every final pay goes out on time.

Is final pay a priority if cash is tight?

Yes. Employee entitlements are among the most sensitive obligations a business has, and in any insolvency they rank ahead of unsecured creditors. Paying people what they’re owed, on time, protects them, protects your reputation and protects you. If you’re choosing which bills to fund first, final pay sits alongside regular wages and super at the top of the list — see our emergency triage for how to rank the rest.

A practical tip: when someone gives notice, ask your payroll provider for a draft final pay figure the same day, then update it on their last day. Two calculations a few weeks apart catch errors and give you a firm number to plan around, rather than a surprise when the final pay run is processed.

Pay people properly — see if you qualify

Final pay is the last thing you do for someone who has worked hard for the business, and it should be right and on time. If the payout lands at a bad moment, tell us the amount, the date and what else is due that week. There’s no credit check to ask the question, your details stay with one team rather than being sent around to other lenders, and a real person looks at the numbers and calls you. Please be accurate on the form so the funding matches the full final pay, super included. For a quick first read, try the triage checker.

See if you qualify →