Most payroll guides are organised by obligation — STP here, super there, awards somewhere else. This one is organised the way the work actually arrives: by where the employee is in their tenure. Five stages, each with its own timeline. Rows are chip-marked Data collected and Payment made so you can see, at a glance, which of the two jobs each step is.
- Offer & pre-startbefore day 1
- First paydayday 1 → 28
- Every paydaythe rhythm
- Life & changesthe years between
- Exitthe last day
Stage 1 — Offer & pre-start
Everything in this stage is data collection. Nothing is paid yet — but every payment that follows is only as correct as what gets captured here.
Identify the modern award and classification level that covers the role — it sets the minimum rate, penalties and allowances every later payment must clear. The contract can't provide less than the NES, award or agreement minimums.
Data collectedThe employee provides their TFN declaration details — TFN, residency for tax purposes, tax-free threshold choice and any study loan — via the ATO online commencement forms in myGov, or the paper declaration (NAT 3092) as a fallback. The details are reported later through STP; no separate lodgement.
Data collectedThe account net pay will be disbursed to. Verify it before the first run — a wrong account discovered on payday is the most avoidable onboarding failure there is.
Data collectedEvery new employee gets the Fair Work Information Statement before, or as soon as possible after, they start. Casuals also get the Casual Employment Information Statement.
Give the Superannuation standard choice form (NAT 13080), generally within 28 days of starting. If the employee doesn't choose, you must request their stapled fund from the ATO before paying anywhere — the employer default is allowed only when the ATO confirms no stapled fund exists. The order is fixed: choice, stapled, default.
Data collectedStage 2 — First payday
The first pay run is where the collected data becomes money and reporting. Two clocks start on this day and never stop.
Their record is created in your STP-enabled payroll software under its identifiers (the software's BMS ID and the employee's payroll ID). The TFN declaration details you collected ride the first pay event to the ATO — there is no separate declaration to send.
Data collectedAn STP Phase 2 pay event goes to the ATO from your software: year-to-date gross (disaggregated), PAYG withheld and super liability, per employee.
The first wages land. Payday itself is set by the award or agreement, not the ATO — and every payment must be at least the award or National Minimum Wage rate for the classification you confirmed in stage 1.
Payment madeWithin one working day of payment, with the details Fair Work requires — rate, gross and net, tax withheld and super.
Under Payday Super (earnings paid from 1 July 2026), 12% of qualifying earnings must be received by the employee's fund within 7 business days of payday — received, not sent. One first-payday grace: contributions for a new employee's fund get 20 business days.
Payment madeTwo onboarding windows close 28 days after the start. No valid TFN and no exemption by now → withhold at the top rate — 47% for residents, including the Medicare levy (current as at July 2026). No fund choice by now → the stapled-fund request to the ATO, before any default.
Stage 3 — Every payday
For most of the employee's tenure, payroll is this rhythm. The dates below repeat every cycle — weekly payrolls run them 52 times a year. The full deadline mechanics live in the lodgement timeline.
The pay event lodges on or before payday; the wages go out on it. Same pair, every cycle.
Payment madeTax comes out of every payment per the ATO tables and the employee's declared details. It is remitted to the ATO on your withholder-size schedule, not your pay cycle: small (up to $25,000/yr) quarterly with the BAS, medium ($25,001–$1m) monthly by the 21st, large (over $1m) within about 6–8 days.
Payment made12% of qualifying earnings, received by the fund within 7 business days of every payday. Initiate 2–3 days early for your channel's clearing time.
Payment madeWithin one working day of payment, every time.
In the background, every pay period adds to the balances: 4 weeks' paid annual leave a year for full-timers (5 for some shift workers) and 10 days' personal/carer's leave, both accruing progressively on ordinary hours — overtime generally doesn't accrue leave. These balances become real money at stage 5.
Stage 4 — Life & changes
Years pass. Three kinds of events punctuate the rhythm — one driven by the employee, one by the Fair Work Commission, one by the calendar.
Paid at the ordinary-hours rate through the normal pay run, and reported in STP Phase 2 broken out by leave type. Family & domestic violence leave — 10 paid days a year — is available to all employees, casuals included.
Payment madeA promotion or change of duties means re-checking the award classification — the new classification and rate are recorded and flow through payslips and STP from the next run.
Data collectedThe Fair Work Commission's Annual Wage Review adjusts the National Minimum Wage and modern-award minimums, usually from the first full pay period on or after 1 July. Re-check every employee's rate against the new minimums rather than carrying last year's figures.
The STP finalisation declaration is due by 14 July each year; it flips the employee's income statement to "Tax ready" in myGov — their signal to lodge. No payment summaries, no group certificates.
Stage 5 — Exit · resignation · termination · redundancy · retirement
The exit compresses more payroll rules into one pay run than the rest of the tenure combined. However the employment ends, the mechanics below are the same — what differs is the notice, the tax schedules that apply, and the cessation code you report.
Written notice, with the NES minimum set by continuous service: 1 week (a year or less), 2 weeks (1–3 years), 3 weeks (3–5 years), 4 weeks (over 5) — plus an extra week if the employee is over 45 with at least 2 years' service. Notice can be worked or paid out in lieu; if paid out, the NES requires the payment on or before the day of termination, and employment ends the day it's paid. Dismissal for serious misconduct needs no notice — but time worked, accrued annual leave and in some cases long service leave must still be paid.
Report the cessation date and a cessation reason code through STP: V (voluntary), I (ill health), D (deceased), R (redundancy), F (dismissal), C (contract cessation) or T (transfer). Reporting it reduces the need to provide an employment separation certificate.
Data collectedMost awards require final pay within 7 days after the last day of employment; where the award or agreement is silent, the Fair Work Act's at-least-monthly pay rule applies. It comprises outstanding wages (including penalty rates and allowances) and all unused annual leave — including leave loading, at what the leave would have paid if taken. Fair Work is blunt about the loading: it's paid out on termination "even when an award, enterprise agreement or employment contract says that it's not." Where applicable, add payment in lieu of notice, redundancy pay, and accrued or pro-rata long service leave (a state/territory entitlement for most employees). Sick and carer's leave is not paid out. Withholding on the unused-leave payout runs under the ATO's Schedule 7.
Payment madeSuper guarantee rides only part of the final pay, and the line falls in an unintuitive place. Payment in lieu of notice IS qualifying earnings — the ATO's checklist says yes for all termination reasons — so 12% SG is payable on it, on the normal 7-business-day receipt clock. But unused-leave payouts and ETPs are NOT ordinary time earnings or qualifying earnings. The ATO's exit checklist puts it in two sentences: "Employment termination payments and unused leave payments don't form part of an employee's ordinary time earnings or qualifying earnings. So you don't need to calculate and pay super guarantee on these amounts." Pay super on the wages and the in-lieu payment; pay none on the leave payout or the ETP.
The final payment is a payday like any other under Payday Super: SG on the final salary and wages (including any payment in lieu of notice) must still be received by the fund within 7 business days. The clock doesn't retire with the employee.
Payment madeAn employment termination payment — a golden handshake, severance pay, unused sick leave or RDOs, compensation for loss of job — must generally be paid within 12 months of termination to keep concessional tax treatment; paid later it becomes a "delayed termination payment" taxed at marginal rates (the 12-month rule doesn't apply to the taxable component of genuine redundancy or early retirement scheme payments). Concessional treatment runs to named caps: the ETP cap ($270,000 for 2026–27, indexed annually) and, for non-excluded payments, the smaller of that and the whole-of-income cap ($180,000, not indexed, reduced by other taxable income in the year). A genuine redundancy — the job abolished — is tax-free up to $13,598 plus $6,801 per completed year of service (2026–27, AWOTE-indexed); only the excess becomes an ETP. Withholding runs under the ATO's Schedule 11 — check the current caps there rather than remembering figures.
Payment madeYou don't wait for year end: a finalisation declaration can be made for an employee at any time during the financial year — the ATO's own example is employees who have ceased employment. Their income statement flips to "Tax ready" in myGov (or they can get it by contacting the ATO, or through a registered tax agent). The 14 July annual declaration remains the backstop, and it expressly covers terminated employees.
Data collectedThe Fair Work Act requires employers to "make, and keep for 7 years" employee records (s 535(1)) — including termination records: how the employment ended, whether notice was given and how much, and who terminated it. A former employee can still ask to see their records after they've gone.
A retirement is, mechanically, the same exit: notice, final pay with the unused-leave payout, the cessation code, early finalisation, the last super contribution on the 7-business-day clock. What changes is what happens next — turning the super balance into retirement income is a matter between the employee and their super fund, not a payroll obligation; point them to their fund and leave that conversation there.
Quick answers
When must final pay be paid?
Follow the award or enterprise agreement — most awards require final pay within 7 days after the employee's last day of employment. If the award or agreement is silent, the Fair Work Act's requirement to pay at least monthly applies. One NES rule overrides both: if notice is paid out in lieu, that payment must be made on or before the day of termination.
Is super payable on a termination payout?
Only on part of it. Super guarantee is payable on the final salary and wages — including payment in lieu of notice, which the ATO lists as qualifying earnings for all termination reasons — and the contribution must still reach the fund within 7 business days of the payment. Unused-leave payouts and employment termination payments are not ordinary time earnings or qualifying earnings, so no super guarantee is calculated or paid on those amounts.
What happens to unused annual leave when someone leaves?
It is paid out in the final pay, at the amount the employee would have received if they had taken the leave during employment — including annual leave loading if they get loading when taking leave, even when an award, enterprise agreement or employment contract says that it's not. Tax is withheld under the ATO's Schedule 7, and the payout does not attract super guarantee. Sick and carer's leave is not paid out.
What is reported to the ATO when an employee leaves?
Through Single Touch Payroll you report the employee's cessation date and a cessation reason code — V (voluntary), I (ill health), D (deceased), R (redundancy), F (dismissal), C (contract cessation) or T (transfer). You can then finalise their STP data straight away rather than waiting for year end; once finalised, their income statement shows as 'Tax ready' in myGov, or they can get it by contacting the ATO or through a registered tax agent.
How long do we keep records after someone leaves?
Seven years. The Fair Work Act (s 535(1)) requires employers to make, and keep for 7 years, employee records — including termination records showing how the employment ended, whether notice was given and who terminated it. The obligation outlasts the employment: a former employee can still ask to see their records.
The whole lifecycle, automated
Ledra Pay runs every stage of this page for you — onboarding that collects TFN, super choice and bank details in the right order, per-payday STP and super on their clocks, award-correct rates through every change, and an exit run that splits super-payable from super-free components automatically — with an evidence trail from offer to final pay.
See Australian payroll →Government sources
- Fair Work Ombudsman — Fair Work Information Statement (give to every new employee).
- ATO — Taking on new employees (online commencement forms / TFN declaration).
- ATO — Withholding if no TFN (the 28-day top-rate rule).
- ATO — Offer employees a choice of super fund (the choice form, ~28 days).
- ATO — Stapled super funds for employers (the choice → stapled → default order).
- ATO — Single Touch Payroll (pay events on or before payday).
- ATO — PAYG withholding (remittance by withholder size).
- ATO — Payment deadlines for Payday Super (7 business days; 20 business days for a new employee's fund).
- Fair Work Ombudsman — Annual leave (accrual on ordinary hours; loading).
- Fair Work Ombudsman — Family and domestic violence leave (10 paid days, all employees including casuals).
- ATO — End-of-year finalisation through STP (14 July; expressly covers terminated employees).
- Fair Work Ombudsman — Dismissal & notice of termination (notice periods by service; payment in lieu; serious misconduct).
- Fair Work Ombudsman — Final pay (most awards within 7 days; what final pay includes; leave loading paid out regardless).
- Fair Work Ombudsman — Long service leave (state and territory laws).
- ATO — When a worker leaves your business (SG on final salary and wages; none on ETPs or unused-leave payouts; finalise any time).
- ATO — What payments are qualifying earnings (payment in lieu of notice: yes; unused leave on termination: no).
- ATO — Payments that are ETPs (what is and isn't an ETP).
- ATO — The 12-month rule (ETP timing; delayed termination payments).
- ATO — Key super rates and thresholds — ETPs (ETP cap $270,000 for 2026–27; redundancy tax-free $13,598 + $6,801/year for 2026–27).
- ATO — Schedule 7 — unused leave payments on termination (withholding on leave payouts).
- ATO — Schedule 11 — employment termination payments (ETP withholding; whole-of-income cap $180,000).
- ATO — STP Phase 2: when an employee transfers or leaves (cessation date and reason codes).
- Fair Work Ombudsman — Record-keeping (7-year retention; termination records; access for former employees).