The current practice in New Zealand for seismic design of shallow foundations is to ensure the LRFD inequality is satisfied, meaning not all of the available bearing strength is mobilised. However, the occurrence of bearing failure may be acceptable, provided the resulting permanent displacements are also acceptable. One method of modelling the displacements of shallow foundations during an earthquake is presented. The method uses a ‘macro-element’ to represent the interaction of the foundation and underlying soil in response to an earthquake, and describes important features of foundation response, including elastic behaviour at small strains, bearing failure, and plastic displacements post-failure. It is well suited to routine structural analysis, and can be used in integrated performance-based design of structure-shallow foundation systems.