What payments are qualifying earnings

What are qualifying earnings?

Qualifying earnings is a new term for the payments to employees that you include when calculating their super guarantee. They are earnings that 'qualify' for super.

The minimum super guarantee for your employees (including eligible contractors) is 12% of their qualifying earnings for the pay period.

How to manage the change to qualifying earnings

From 1 July 2026, you use qualifying earnings to calculate super guarantee contributions for your employees.

For most employers, the new concept of qualifying earnings doesn’t change the amount of super guarantee you pay:

• The super guarantee rate (12%) hasn't changed.
• All the employee payments that were included in super guarantee calculations up to 30 June 2026 continue to be included as qualifying earnings from 1 July 2026.
• The only additional payment type is commissions for work done entirely outside ordinary hours. If you pay these types of commissions to your employees, you must now include them in qualifying earnings when calculating super guarantee contributions.

Employee eligibility for super guarantee hasn't changed. Most employees are eligible. Independent contractors paid mainly for their labour are considered employees for super guarantee purposes and eligible for super guarantee.

What amounts count as qualifying earnings?

Qualifying earnings include the following.

• Ordinary time earnings, i.e. payments for ordinary hours of work, including certain types of paid leave, allowances, bonuses and lump sum payments. There are no changes to what payments are considered ordinary time earnings under Payday Super.
• All commissions paid to an employee. Under Payday Super this includes commissions paid solely for work done entirely outside ordinary hours.
• Salary sacrifice amounts that would qualify as qualifying earnings had they not been sacrificed to superannuation. This is effectively the same as the rule that applied prior to Payday Super.
• Earnings paid to workers who fall under the expanded definition of employee, including payments to independent contractors paid mainly for their labour.

Some payments may fall into more than one category of qualifying earnings (such as commissions). Those amounts are counted only once.

Ordinary time earnings

Payments for ordinary hours of work are qualifying earnings. This includes certain types of paid leave, some allowances, bonuses and lump sum payments.

The following tables are non-exhaustive lists of common amounts employers pay. They indicate which amounts are considered ordinary time earnings for the purposes of the Superannuation Guarantee (Administration) Act 1992. All ordinary time earnings are included in qualifying earnings and count towards the calculation of an employee's super guarantee.

• Gross
• Paid leave and other payments
• Allowances
• Overtime
• Bonuses and commissions
• Directors' fees
• Lump sum payments

How you work out ordinary time earnings might be impacted if your employee has a salary sacrifice arrangement in place.

You may have additional super obligations under an industrial instrumentExternal Link (award or agreement) to pay super on amounts that are not ordinary time earnings.

Gross

Table 1: Gross

Payment	Ordinary time earnings	Qualifying earnings
Ordinary hours of workExternal Link – as defined in an award or agreement, or if the ordinary hours of work are not stated in an award or agreement, or not separated from other hours, the total hours	Yes	Yes
Casual loading	Yes	Yes
Shift penaltiesExternal Link (including public holiday penalties)	Yes	Yes
Workers' compensationExternal Link – payment for hours an employee performs work or is required to attend work See Workers' compensation (paid leave type W)	Yes	Yes
Piece ratesExternal Link for work done during ordinary hours	Yes	Yes
Daily rates for employees compensated using a flat daily rate	Yes	Yes
Flexi time: all ordinary hours paid to employees under a flexi-time arrangement flexi-time arrangements are considered different to rostered days off (RDOs) and time off in lieu	Yes	Yes
Breach of break paymentsExternal Link, such as for rest, meal and crib (a paid meal break): where an employee doesn't get an appropriate break, some awards require employees to be paid at overtime rates until the employee is released from duty even though the employee is being paid at overtime rates, they are working ordinary hours	Yes	Yes
Time for travel or training paid within the span of ordinary hours	Yes	Yes
Charge rates for work performed, outcomes achieved, or targets met by contractors	Yes	Yes
Public holidaysExternal Link – not worked or worked as ordinary hours. For more information see overtime	Yes	Yes

 

 

Paid leave and other payments

Paid leave includes the various forms of payment, including absences, cashing out in service or upon termination.

The tables below include the leave type identifier used in Single Touch Payroll (STP).

Other paid leave (STP paid leave type O)

Table 2: Other paid leave (STP paid leave type O)

Payment	Ordinary time earnings	Qualifying earnings
Annual leaveExternal Link	Yes	Yes
Annual leave loading that is clearly linked to a lost opportunity to work overtime	No	No
Annual leave loadingExternal Link – all other	Yes	Yes
Long service leaveExternal Link that is not paid under a portable long service leave schemeExternal Link	Yes	Yes
Long service leave that is paid by a scheme administrator under a portable long service leave schemeExternal Link	No	No
Family and domestic violence leaveExternal Link	Yes	Yes
Rostered days offExternal Link – time taken and paid at ordinary rates	Yes	Yes
Sick, personal and carers leaveExternal Link	Yes	Yes
Time off in lieu of overtimeExternal Link – time taken and paid at ordinary rates	Yes	Yes
Study leave	Yes	Yes
Special paid leave	Yes	Yes
Gardening leave	Yes	Yes

Paid parental leave (STP paid leave type P)

Table 3: Paid parental leave (STP paid leave type P)

Payment	Ordinary time earnings	Qualifying earnings
Employer paid parental leaveExternal Link, such as maternity leave, paternity leave or adoption leave	No	No
Government paid parental leave	No	No

Workers' compensation (STP paid leave type W)

When considering workers’ compensation for the purposes of ordinary time earnings, this refers only to amounts you pay in relation to compensation schemes administered by either a:

• federal, state or territory workers’ compensation authority
• federal, state or territory road and transport accident authority.

Table 4: Workers' compensation (STP paid leave type W)

Payment	Ordinary time earnings	Qualifying earnings
Workers' compensationExternal Link – payment for hours an employee performs work or is required to attend work	Yes	Yes
Workers' compensationExternal Link – employee is not required to work, including any top-ups or make-up pay to bring the amount paid on these absences up to their normal rate of pay	No	No

Ancillary and defence leave (STP paid leave type A)

Fair Work defines a range of leave types that are collectively referenced in STP as 'ancillary' leave.

Table 5: Ancillary and defence leave (STP paid leave type A)

Payment	Ordinary time earnings	Qualifying earnings
Community service leaveExternal Link, including voluntary emergency management activities for bodies such as a state emergency service, country fire authority or the RSPCA	No	No
Jury duty leaveExternal Link, including attendance for jury selection and jury duty	No	No
Defence reserve leaveExternal Link paid to volunteers of the Australian Defence Forces to undertake defence services	No	No

Cash out of leave in service (STP paid leave type C)

Table 6: Cash out of leave in service (STP paid leave type C)

Payment	Ordinary time earnings	Qualifying earnings
Cashed out annual leaveExternal Link and leave loading in service Refer to Overtime for leave loading that is referrable to the lost opportunity to work overtime	Yes	Yes
Cashed out long service leave in service Refer to Other paid leave (paid leave type O) for long service leave paid under a portable leave scheme	Yes	Yes
Cashed out sick, personal and carer’s leave in serviceExternal Link	Yes	Yes
Cashed out rostered days off in service	Yes	Yes
Cashout of time off in lieu of overtime pay in service	No	No

Unused leave on termination (STP paid leave type U)

This section only applies to the specific leave types listed below. For other types of leave paid upon termination, see Termination paymentsExternal Link.

Table 7: Unused leave on termination (STP paid leave type U)

Payment	Ordinary time earnings	Qualifying earnings
Annual leave or leave loadingExternal Link accrued after 17 August 1993 paid on a normal termination, such as voluntary resignation, employment terminated due to inefficiency, or retirement	No	No
Long service leaveExternal Link accrued after 17 August 1993 paid on a normal termination, such as voluntary resignation, employment terminated due to inefficiency, or retirement	No	No

Allowances

AllowancesExternal Link may be paid to compensate employees:

• for their work efforts to recognise a higher skill level
• to compensate for adverse work conditions
• to compensate for the employee incurring an expense.

Table 8: Allowances

Payment	Ordinary time earnings	Qualifying earnings
Hourly on-call allowance for ordinary hours of work	Yes	Yes
Task allowances for: work efforts or skills – such as industry allowances, higher duties, leading hand, first aid or supervisor allowances adverse conditions – such as allowances for working at heights, in confined spaces, in the cold, wet or heat, or danger staying employed with the current employer – such as for retention allowances. These are reported as allowance type KN in your STP reporting.	Yes	Yes
Expense allowances that are paid with the reasonable expectation that the money will be fully expended by the employee in the course of providing their services	No	No
Allowances that represent partial compensation for expenses likely to be incurred by employees that are paid: regardless of whether or not the employee incurred the expense, or where the allowance amount has no relationship to the actual cost incurred by the employee	Yes	Yes

 

For more information and additional examples, see Law Companion Ruling 2026/D1.

Overtime

OvertimeExternal Link payments are not ordinary time earnings, provided the employee's ordinary hours of work are clearly identified in an award or agreement. As such, overtime payments are also not qualifying earnings.

If you can't distinctly identify overtime amounts, all the hours actually worked are included in the employee's ordinary hours of work in the award or agreement and are therefore qualifying earnings.

These rules also apply if the payments are calculated as an annualised or lump sum component of a total salary package. Overtime payments must be clearly identifiable. Otherwise, all hours worked are considered ordinary hours of work.

Table 9: Overtime

Payment	Ordinary time earnings	Qualifying earnings
OvertimeExternal Link payments – provided the employee's ordinary hours of work are clearly identified, such as: beyond their ordinary hours of work outside the agreed number of hours outside the spread of ordinary hours (the times of the day ordinary hours can be worked)	No	No
Annual leave loading referrable to the lost opportunity to work overtime	No	No
Time off in lieuExternal Link – cash out of time off in lieu in service For unused time off in lieu on termination, see termination payments	No	No
On-call allowance for hours outside ordinary hours of work	No	No
Call back allowance	No	No

 

Bonuses and commissions

All commissions are qualifying earnings under Payday Super law, including commissions solely for work performed entirely outside ordinary hours.

However, a bonus payment made for work performed entirely outside of ordinary hours is not included in qualifying earnings.

Table 10: Bonuses and commissions

Payment	Ordinary time earnings	Qualifying earnings
Commission paymentsExternal Link	Yes	Yes
Commission solely for work performed entirely outside ordinary hours	No	Yes
Performance bonus	Yes	Yes
Christmas bonus	Yes	Yes
Bonus labelled as ex gratia but in respect of ordinary hours of work	Yes	Yes
Sign-on bonus for new employees	Yes	Yes
Referral bonus	Yes	Yes
Return to work bonus after parental leave	Yes	Yes
Bonus solely for work performed entirely outside ordinary hours	No	No

 

Directors' fees

Directors' fees include payments to:

• the director of a company
• a person who performs the duties of a director of the company
• a member of the committee of management of the company, or a person who performs the duties of such a member if the company is not incorporated.

Directors’ fees may include payment to cover travelling costs, costs associated with attending meetings and other expenses incurred in the position of a company director.

Table 11: Directors' fees

Payment	Ordinary time earnings	Qualifying earnings
Remuneration paid to a working director	Yes	Yes
Remuneration paid to a non-working director	Yes	Yes

Lump sum payments

Lump sum payments include payments in arrears, and return to work and termination payments.

Payments in arrears (STP lump sum E)

Lump sum E refers to back pay or an arrears paymentExternal Link that was payable more than 12 months before the payment was made. Regardless of the period to which the payment relates, ordinary time earnings are worked out on the actual component of pay that is being paid.

For example, if the back pay or arrears payment includes ordinary hours, higher duties allowances, paid annual leave and overtime, then all but the overtime are ordinary time earnings (and therefore qualifying earnings).

Return to work payments (STP lump sum W)

Table 12: Return to work payments (STP lump sum W)

Payment	Ordinary time earnings	Qualifying earnings
Bonus paid to an ex-employee to encourage them to return to the employer	Yes	Yes
Bonus payments made to end industrial action and have employees resume work	Yes	Yes
Bonus paid to an employee who has resigned and is encouraged to withdraw their resignation	Yes	Yes

Termination payments

Payments made in consequence of the termination of employmentExternal Link are generally not ordinary time earnings.

Table 13: Termination payments

Payment	Ordinary time earnings	Qualifying earnings
Unused leave on termination, including annual leave, annual leave loading and long service leave. This applies regardless of the reason for termination or treatment for tax purposes.	No	No
Payment in lieu of noticeExternal Link, for all termination reasons. This applies regardless of the reason for termination or treatment for tax purposes.	Yes	Yes
Unused personal or carers leave on termination, for all termination reasons. This applies regardless of the reason for termination or treatment for tax purposes.	No	No
Unused rostered days off (RDOs) and time off in lieu of overtime paid on termination	No	No
Other payments in consequence of the termination of employment, such as: a gratuity or golden handshake genuine redundancyExternal Link or early retirement scheme payments above the tax-free limit severance pay non-genuine redundancy compensation for loss of job compensation for wrongful dismissal invalidity payments other than compensation for personal injury lump sum payments paid due to the death of an employee	No	No

 

Salary sacrifice contributions

Amounts you pay to your employee that would be qualifying earnings but have instead been salary sacrificed to superannuation are included in qualifying earnings.

Generally, when an employee has a salary sacrifice arrangement in place, you need to consider how the salary that is being sacrificed is taken into account when determining the employee's qualifying earnings under the Superannuation Guarantee (Administration) Act 1992 (SGAA).

Table 14: Salary sacrifice

Sacrificed amounts	Qualifying earnings
Salary sacrificed to superannuation – where the salary that is sacrificed would otherwise be qualifying earnings if it was instead paid to the employee	Yes
Salary sacrificed to superannuation – where the salary that is sacrificed would not otherwise be qualifying earnings if it was instead paid to the employee, such as paid parental leave or overtime	No
Salary sacrificed to other employee benefits – including amounts that are fringe benefits and exempt fringe benefits	No

Payments that are not qualifying earnings

The tables above list a number of payment types that are excluded from qualifying earnings.

In addition, the following payments are not qualifying earnings and are therefore not included when calculating super guarantee contributions:

• fringe benefits and other benefits
• reimbursements for expenses
• overpayments to employees
• payments to employees under 18 and domestic or private workers unless they work more than 30 hours in a week
• payments to employees temporarily working in Australia who are covered by a bilateral social security agreement (for more information see International workers).

Fringe benefits and other benefits

A fringe benefit is like a payment to an employee, but in a different form to salary and wages. Fringe benefits are not qualifying earnings.

Other 'benefits' given by employers to employees that are neither fringe benefits nor salary or wages are also excluded from qualifying earnings, including:

• super contributions made by an employer to a complying super fund for the benefit of an employee
• the acquisition of a share, or of a right to acquire a share, under an employee share scheme.

Salary sacrifice contributions to super are added to an employee's qualifying earnings if the amount being sacrificed would otherwise be qualifying earnings if it was instead paid to the employee.

Reimbursements for expenses

Reimbursements are payments made to employees for actual expenses already incurred and are not qualifying earnings.

Overpayments to employees

If you find that you have overpaid an employeeExternal Link, and the employee is required to repay the overpaid amount to you, the overpaid amount is no longer qualifying earnings for super guarantee purposes.

If you allow your employee extra time to repay the overpaid amounts, the law treats you as having made a loan to your employee. In this situation:

• the loan amount is not subject to super guarantee
• the loan amount is not reportable in STP
• no salary sacrifice can be deducted from the loan amount.

You must decide if the employee is required to repay the overpaid amount and consider whether you need to make a correction to your STP records.

If you have already paid super for the overpayment, this amount will be considered a credit and can be used to offset future payments for that employee. If the employee is no longer working for you, you will need to contact the fund to recover the payment.

Employees under 18 and domestic or private workers

You do not need to pay super guarantee on payments to an employee who is under 18 years old, or a private or domestic worker, in any week where the employee or worker doesn't work more than 30 hours.

These employee types have not changed under Payday Super. For more information see Work out if you have to pay super.