When a company enters voluntary administration, unpaid super becomes a priority debt but is not paid immediately. Super earned during administration must be paid if the business continues trading. Recovery of unpaid super depends on available assets, and if the company liquidates, employees may need to pursue it through the ATO.
On This Page
- Introduction
- Is Super Paid During Voluntary Administration?
- What Happens to Unpaid Super?
- What If the Company Is Restructured or Liquidated?
- What Should Employees Do in Case of Unpaid Super?
- What This Means for Directors
- Next Steps
- FAQs
Introduction
When a company enters voluntary administration, one of the most common concerns — for both employees and directors — is what happens to superannuation.
Unlike wages, super is often misunderstood in insolvency. It doesn’t disappear, but it also isn’t always paid immediately. Whether it’s recovered depends on when it was owed, whether the business continues trading, and what outcome the administration leads to.
Is Super Paid During Voluntary Administration?
The key distinction is timing.
If the company continues trading during voluntary administration, employees who keep working must be paid for their services — including superannuation. These payments are treated as an expense of the administration and are paid from available company assets.
However, super that was owed before the administrator was appointed is treated differently. It becomes a debt and is not typically paid during the administration period itself.
What Happens to Unpaid Super?
Unpaid super is not treated like an ordinary business debt. It sits alongside wages as a priority employee entitlement, meaning it is paid ahead of unsecured creditors if there are funds available.
That said, priority does not mean guaranteed. If the company has limited assets, employees may only receive part of what they are owed — or nothing at all.
Because of this, the outcome of the voluntary administration becomes critical.
What If the Company Is Restructured or Liquidated?
At the end of voluntary administration, creditors decide what happens next. This usually results in either a restructuring arrangement (a DOCA) or liquidation.
- If a Deed of Company Arrangement (DOCA) is approved, it will outline how employee entitlements — including super — are to be paid. In most cases, employees must receive at least what they would have received in a liquidation, although the timing and structure of payments may vary.
- If the company proceeds to liquidation, employee entitlements are paid in a strict order. Wages are paid first, followed by superannuation, then leave entitlements and redundancy. Employees rank ahead of unsecured creditors, but payment still depends on the funds available after costs are covered.
It’s also important to understand that the Fair Entitlements Guarantee (FEG) does not cover unpaid super. While it may assist with wages and leave, super must usually be pursued through the ATO.
What Should Employees Do in Case of Unpaid Super?
If you are owed super during voluntary administration, the most important step is to act early and stay informed.
You should confirm whether your employment continued after the administrator’s appointment, as this affects whether your entitlements should have been paid during the administration. It’s also important to lodge your claim with the administrator and keep clear records of payslips and amounts owed.
If super remains unpaid, the ATO may be able to assist in recovering those amounts.
What This Means for Directors
For directors, unpaid super is not just an employee issue — it can create personal exposure.
Outstanding super obligations can trigger Director Penalty Notices (DPNs), particularly if they have not been reported to the ATO on time. While voluntary administration may limit further liability in some cases, it does not automatically remove existing obligations.
Next Steps
Superannuation remains a priority obligation during voluntary administration, but recovery is not always straightforward.
What gets paid — and when — depends on timing, available assets, and the outcome of the administration process. For both employees and directors, understanding these distinctions early can make a significant difference to the outcome.
At Halo Advisory, we work for you — the director. Financial expert Greg Bartels offers a no-obligation, confidential conversation to help you understand where you stand, what risks exist, and what options are realistically available before deadlines reduce control. Get in touch today.
FAQs
Is superannuation paid during voluntary administration?
Yes — but only in specific circumstances.
If a company continues trading after entering voluntary administration, employees who keep working must be paid their wages and superannuation as they fall due. These payments are treated as an expense of the administration and are paid from available company assets.
However, super owed before the administrator was appointed is not usually paid during the administration itself. It becomes a creditor claim instead.
For a broader understanding of how this process works, see our guide on Voluntary Administration Explained: What They Do, Who Appoints Them, & What Happens Next.
You can also refer to ASIC’s employee guidance here → Insolvency for employees | ASIC
What happens to unpaid super before voluntary administration?
Unpaid superannuation from before the appointment is treated as a debt owed by the company.
It is classified as a priority employee entitlement, meaning it ranks ahead of general unsecured creditors — but it is only paid if there are sufficient funds available through a restructuring (DOCA) or liquidation.
If the company cannot pay these amounts, employees may need to pursue recovery through the ATO.
For more context on what happens when a business becomes insolvent, read: What Happens When a Business Becomes Insolvent in Australia
Is superannuation a priority debt in voluntary administration?
Yes. Under Australian insolvency law, unpaid superannuation — including the Super Guarantee Charge (SGC) — is treated as a priority debt, alongside wages.
This means it is paid before unsecured creditors in both liquidation and most DOCA arrangements, provided there are enough assets available.
The ATO explains how super is treated in insolvency here → Superannuation and insolvency | Australian Taxation Office
Can employees recover unpaid super if the company is liquidated?
Potentially — but it depends on available funds.
In liquidation, employee entitlements are paid in a strict order, with superannuation ranking after wages but before other unsecured debts. Employees are considered priority creditors, which improves their position — but recovery is not guaranteed.
If there are insufficient assets, employees can pursue unpaid super through the ATO, which can take enforcement action against the company.
Does the Fair Entitlements Guarantee (FEG) cover unpaid super?
No. The Fair Entitlements Guarantee (FEG) is a government safety net that may cover unpaid wages, leave, and redundancy when a company enters liquidation. However, it does not cover superannuation.
Employees must instead pursue unpaid super through the ATO.
You can learn more about FEG here → Fair Entitlements Guarantee – Department of Employment and Workplace Relations, Australian Government
Who is responsible for paying super during voluntary administration?
If the business continues trading, the voluntary administrator is responsible for ensuring that employees are paid for work performed after their appointment, including superannuation.
These payments are made from the company’s available assets and are treated as a cost of running the business during the administration period.
If the company stops trading, no further super accrues, and outstanding amounts become part of the creditor claims.
Can directors be personally liable for unpaid super?
Yes — in many cases.
Unpaid super can trigger a Director Penalty Notice (DPN) from the ATO, which can make directors personally liable for outstanding super obligations.
Whether this liability can be reduced or remitted depends on factors such as:
- Whether the super was reported to the ATO on time
- What steps were taken once financial distress became apparent
Should employees lodge a claim for unpaid super during voluntary administration?
Yes — and as early as possible.
Employees should formally lodge their claim with the voluntary administrator and provide supporting documents such as payslips and employment records. This ensures their entitlement is recognised in any restructuring or liquidation outcome.
It’s also important to monitor the progress of the administration and understand how the proposed outcome (DOCA or liquidation) may affect repayment.
