184.108.40.206 Payability of SA - payments from an employer
Note: SA closed to new entrants on 20 March 2020 and ceased on 20 September 2020. The following information is for historical purposes only.
This topic describes how payability of SA is affected by:
- the payment of sick leave
- a recipient choosing not to use their sick leave entitlements
- subsequent use of unused sick leave
- payment of annual and other leave
- employment termination payments, and
- leave entitlements paid to a third party.
Payment of sick leave from an employer
Any payments of sick leave made to a recipient are assessed as income for the period covered by the payment, under the IMP rules.
Unused sick leave entitlements may be considered to be unavailable when:
- an employer is bankrupt and cannot make the payment, or
- the employer and recipient are in dispute about sick leave entitlements.
Policy reference: SS Guide 4.3.4 Income Maintenance Period
SA recipient chooses not to use sick leave
If an SA recipient has sick leave entitlements but does not access them, they are assessed as ordinary income. The assessment of unused sick leave entitlements depends upon the following factors:
- the amount of unused leave that is available to the recipient
- the period that the recipient is qualified for SA
- whether a recipient reclaims SA more or less than 6 weeks after ceasing to be qualified for SA, and
- whether a recipient decides to use their sick leave entitlement after the unused leave has been treated as income.
Examples: The following table gives some examples of how unused sick leave is assessed.
|If a recipient's sick leave entitlement is …||and they qualify for SA for …||then the amount of unused sick leave that is assessed as ordinary income is …|
|25 days||60 days||25 days.|
|65 days||60 days||60 days.|
|65 days||60 days, and the qualification period is extended by 20 days||65 days.|
Subsequent use of unused sick leave
If sick leave has been deemed to have been taken and the recipient subsequently uses the leave while SA is current, the payment of sick leave is not treated as ordinary income if it is less than or equal to the previous assessment of unused sick leave entitlements. If the person receives more sick leave than has been deemed to have been taken, then the additional amount is treated as ordinary income.
Annual leave & other leave payments
Payments such as annual leave and long service leave affect the payment of SA only when they are paid by the employer. These payments are assessed as income for the period covered by the payment under the IMP rules.
Graduated return to work
Earnings of SA recipients on a graduated return to work are treated as ordinary income under the income test.
Policy reference: SS Guide 220.127.116.11 Qualification for SA
Employment termination payments
If an SA recipient's employment is terminated, any payments made on or after termination are assessed as income under the IMP rules.
Leave entitlements paid to a third party
Any leave entitlements that are paid to a third party are deemed to have been paid to the SA recipient.