Question
Can an employee salary sacrifice their annual and/or long service leave upon termination to superannuation?
Answer
No. To be an effective salary-sacrifice for termination lump sum leave entitlements, a written agreement must be entered into prior to the leave accruing.
For example, if an employee is to retire in one year’s time, the employee could enter into an effective salary-sacrifice agreement to cover four weeks’ annual leave and long service leave that will accrue from the date of the agreement until the date of termination. However, the employee will not be able to salary-sacrifice any leave that accrued prior to the effective date of the agreement.