Short answer: everything they have earned but not yet been paid, plus their annual leave. Personal and sick leave is not paid out.
What goes in the final pay
Outstanding wages for hours worked, including any penalty rates and allowances. All accrued annual leave. Annual leave loading, if they received it while employed. Accrued or pro rata long service leave, if they qualify under your state or territory rules. Payment in lieu of notice, if you are not having them work it out. Redundancy pay, if the role is genuinely redundant and your business is not exempt.
What does not
Accrued sick and carer’s leave is not paid out when employment ends. This surprises a lot of people on both sides of the desk.
The loading catch
Annual leave loading gets paid out on termination even if your award, agreement or contract says it does not. Check your payroll settings, because plenty of systems get this wrong.
When it has to be paid
Your award or agreement may set a deadline, and many do. If nothing does, best practice is to pay on the last day or on the next scheduled pay day. Do not hold final pay back because equipment has not been returned or you are unhappy about how they left. Deal with those separately.
Do it once, do it right
A wrong final pay is the most common reason an ex-employee ends up talking to the Fair Work Ombudsman. Run the calculation, check the leave balances against the actual records, and give them a written breakdown with the payment.
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This is general guidance for Australian employers, not advice on your specific situation. Awards, agreements and contracts can change the answer. When in doubt, ask.
Quick answer
Do I have to pay out sick leave when an employee leaves?
No. Final pay includes outstanding wages, all accrued annual leave and leave loading, long service leave if they qualify, and notice or redundancy pay where they apply. Accrued sick and carer’s leave is not paid out.