From 1 July 2008, you must use ordinary time earnings, as defined in the Superannuation Guarantee (Administration) Act 1992, to calculate the minimum super guarantee contributions required for your eligible employees. This ensures all eligible employees are treated the same for super guarantee purposes.
Ordinary time earnings (OTE) are generally what your employees earn for their ordinary hours of work, including:
- over-award payments
- certain bonuses
- commissions
- shift-loading
- certain allowances.
OTE excludes:
- a payment for unused sick leave
- an unused annual leave payment or unused long service leave payment
when made to an employee on the termination of their employment. If the total of the above is greater than the maximum contribution base for the quarter - OTE is the maximum contribution base.
An 'employee's ordinary hours of work' are the hours specified as their ordinary hours of work under the relevant award or agreement, or under the combination of such documents, that governs the employee's conditions of employment.
If the ordinary hours of work are not specified in a relevant award or agreement, the 'ordinary hours of work' are the normal, regular, usual or customary hours worked by the employee, as determined by all the circumstances of the case. This is not necessarily the minimum or maximum number of hours worked or required to be worked.
Where it is not possible or practicable to determine the normal, regular, usual or customary hours of work of an employee, the actual hours worked by the employee are taken to be their ordinary hours of work.
Overtime payments
Payments for work performed during hours outside an employee's ordinary hours of work are not OTE. This applies whether:
- the payments are calculated at an hourly rate
- the employee gets a specific loading
- the payments are calculated as an annualised or lump sum component of a total salary package, that is expressly referable to overtime hours as remuneration for overtime hours worked.
However, where overtime amounts cannot be distinctly identified, the hours actually worked will be included in ordinary hours of work.
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For more information about what is included or excluded from OTE, see Checklist for salary or wages and ordinary time earnings.
A new ruling on OTE and salary or wages, Superannuation Guarantee Ruling SGR 2009/2, was issued on 13 May 2009. The date of effect of the new ruling is 1 July 2009. This ruling replaces Superannuation Guarantee Ruling SGR 94/4, 'Ordinary time earnings' and Superannuation Guarantee Ruling SGR 94/5, 'Salary or Wages', which were withdrawn from 1 July 2009.
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Last Modified: Wednesday, 25 January 2012