Termination payment
Termination payment is the amount paid to an employee when their employment concludes. This includes components like notice pay, redundancy pay and accrued benefits like unused annual leave and long service leave. It's also commonly known as final pay.
When an employment relationship ends, the employee is often entitled to certain financial compensations. These include notice pay (payment during the notice period if the employment is terminated by the employer), redundancy pay (if the termination is due to redundancy), and payment for any unused leave such as annual or long service leave. This final sum helps to settle all the financial obligations of the employee with the organisation.
Calculating final pay
Final pay usually includes wages owed up to the termination date, payment in lieu of notice if notice is not worked, unused annual leave (and leave loading if the award or agreement provides it), any long service leave owed under state or territory law, and redundancy pay if it applies. Unused personal/carer's leave is not paid out. Some parts may be taxed as an employment termination payment. Many awards require final pay within 7 days of termination. For example, an employee leaving with 2 weeks of unused annual leave must be paid what they would have received had they taken that leave.
Read our guides to notice periods and redundancy pay.
General information only
This content is general information about Australian employment law, current at the date it was last reviewed. It does not take your circumstances into account and is not legal advice. For advice about your situation, call Employment Compass on 1300 144 002.
Last reviewed: October 2026
Explore more terms
Looking for a related term? Browse plain-English definitions of Fair Work and employment law terms and acronyms, or call our 24/7 HR advice line.
Back to Glossary