• Long-distance drivers – OTE

    The definition of ordinary time earnings (OTE) for long-distance drivers is the same as it is for other employees. However, some employers may not be calculating OTE correctly because they are using a now-outdated definition.

    The Road Transport (Long Distance Operations) Award 2010 defines ‘ordinary hours of work’, effective from the first pay period commencing on or after 19 March 2012. For drivers covered by the award, the ordinary hours of work are 38 hours per week. These may be determined as an 'average' of not more than 28 consecutive days.

    You can calculate super guarantee (SG) for long-distance drivers using one of three methods:

    • minimum-guaranteed-wage method (cannot be used when the driver's wages paid is more than the minimum under one of the other two methods).
    • hourly-driving-rate method
    • cents-per-kilometre method.

    The following examples show how to calculate SG by each of the three methods, for two periods:

    The amendment made to the award does not automatically amend the terms in existing enterprise agreements. Some enterprise agreements may still not set out what the ordinary hours of work are. The examples that follow are based on the terms in the award. Employers should seek advice if the terms of their enterprise agreement vary from that of the award.

    Calculating super guarantee (since 19 March 2012)

    Example 1: Minimum-guaranteed-wage method

    Mary is a long-distance driver, Grade 6, working under the Road Transport (Long Distance Operations) Award 2010. The award stipulates a minimum guaranteed wage payment of $767 per week from 1 July 2014, regardless of how little Mary actually drives. As Mary only receives this minimum payment under the award, her employer calculates the OTE using that amount.

    Super guarantee

    = OTE x SG rate

    = $767.00 x 9.5%

    = $72.86 per week

    End of example

     

    Example 2: Hourly-driving-rate method

    Sean is a long distance driver, Grade 6, working under the Road Transport (Long Distance Operations) Award 2010. He is paid under the hourly-driving-rate method.

    The hourly driving rate of $29.91 for full-time employees (from 1 July 2014) includes two components:

    • an industry disability allowance of 1.3 times a base rate
    • an overtime allowance of 1.2 times a base rate.

    Although the hourly rate includes a component referred to as an overtime allowance, the allowance is not deducted from the total when calculating OTE because the whole hourly driving rate is paid for what are defined to be ordinary hours of work (except where in excess of 38 hours).

    Sean has worked his ordinary hours of 38 hours in each of the last three weeks. This week Sean works 50 hours.

    Super guarantee

    = OTE x SG rate

    = ordinary hours x hourly rate x SG rate

    = 38 hours (as defined in the award) x $29.91 x 9.5%

    = $107.97

    End of example

     

    Example 3: Casual employee using hourly-driving-rate method

    Rosie is a long distance driver, Grade 6, working under the Road Transport (Long Distance Operations) Award 2010. She is a casual employee and paid under the hourly-driving-rate method.

    The hourly driving rate for full-time employees is $29.91 (from 1 July 2014). Casual employees are paid an additional 15%. The rate includes two components:

    • an industry disability allowance of 1.3 times a base rate
    • an overtime allowance of 1.2 times a base rate.

    Although the hourly rate includes a component referred to as an overtime allowance, the allowance is not deducted from the total when calculating OTE because the whole hourly driving rate is paid for what are defined to be ordinary hours of work (except where in excess of 38 hours).

    Rosie has worked her ordinary hours of 38 hours in each of the last three weeks. This week Rosie works 45 hours.

    Super guarantee

    = OTE x SG rate

    = ordinary hours x hourly rate x SG rate

    = 38 hours (as defined in the award) x $34.40 ($29.91+15%) x 9.5%

    = $124.18

    End of example

     

    Example 4: Cents-per-kilometre method

    Jack, a Grade 6 long distance driver, travelled from Melbourne to Darwin via the Stuart/Western Highway (3,749 km) and was paid using the cents-per-kilometre method under the Road Transport (Long Distance Operations) Award 2010. The cents-per-kilometre rate – 39.88c/km for full-time employees (from 1 July 2014) – includes two components:

    • an industry disability allowance of 1.3 times a base rate
    • an overtime allowance of 1.2 times a base rate.

    Although the rate includes a component referred to as an overtime allowance, the allowance is not deducted from the total when calculating OTE because the whole cents-per-kilometre rate is paid for what are defined to be ordinary hours of work (except where in excess of 38 hours).

    Jack received 39.88c/km x 3,749km = $1,495.10.

    As this amount is in excess of the minimum guaranteed payment stipulated in the award, Jack's employer uses his ordinary hours to work out his OTE.

    For the purposes of simplicity, the ATO allows for the cents-per-kilometre rate to determine the amount of kilometres driven during ‘ordinary hours of work’ with reference to an average driving speed of 75 kilometres per hour.

    Therefore, a reasonable method of calculating the distance travelled during ordinary hours of work would be:

    38 hours x 75 km = 2,850 km

    The calculation to determine the minimum amount of SG required is therefore:

    Super guarantee

    = OTE x SG rate

    = c/km x 2,850 km x SG rate

    = 39.88c/km x 2,850 km x 9.5%

    = $107.97

    End of example

    Calculating super guarantee (before 19 March 2012)

    The following examples show you how to work out SG amounts for pay periods that started within the period 1 July 2009 to 18 March 2012, using each of the three methods. During this time the SG rate was 9%.

    Example 5: Minimum-guaranteed-wage method

    Anne was a long distance driver, Grade 6, working under the Road Transport (Long Distance Operations) Award 2010. The award stipulated a minimum guaranteed wage payment of $705.30 per week (from 1 July 2011), regardless of how little Anne actually drove. As Anne only received this minimum payment under the award, her employer calculated the OTE using that amount.

    Super guarantee

    = OTE x SG rate

    = minimum wage x SG rate

    = $705.30 x 9%

    = $63.47 per week

    End of example

     

    Example 6: Hourly-driving-rate method

    Aaron was a long distance driver, Grade 6, working under the Road Transport (Long Distance Operations) Award 2010. He was paid under the hourly-driving-rate method.

    The hourly driving rate of $27.51 for full-time employees (from 1 July 2011) included two components:

    • an industry disability allowance of 1.3 times a base rate
    • an overtime allowance of 1.2 times a base rate.

    As Aaron worked for 50 hours in a week and the award at that time did not define what ordinary hours of work were, his employer calculated the OTE as the amount earned under the hourly driving rate for the 50 hours actually worked, less the overtime allowance (as that component was not considered to be a payment for ordinary hours of work).

    Super guarantee

    = OTE x SG rate

    = hourly rate earnings (less overtime allowance) x SG rate

    = 50 hours x $27.51 hourly rate  x 9%

    = 123.80

    To remove the overtime allowance, divide this amount by 1.2

    = 123.80 ÷ 1.2

    = $103.16

    End of example

     

    Example 7: Cents-per-kilometre method

    Joe, a Grade 6 long distance driver, travelled from Melbourne to Darwin via the Stuart/Western Highway (3,749 km) and was paid using the cents-per-kilometre method under the Road Transport (Long Distance Operations) Award 2010. The cents-per-kilometre rate – 36.68c/km for full-time employees (from 1 July 2011) – includes two components:

    • an industry disability allowance of 1.3 times a base rate
    • an overtime allowance of 1.2 times a base rate.

    Joe received 36.68c/km x 3,749km = $1,375.13.

    As this amount was in excess of the minimum guaranteed payment stipulated in the award, Joe's employer used his remuneration to work out his OTE. They removed the overtime allowance from the calculations as that component was not considered to be a payment for ordinary hours of work. The calculation to determine the minimum amount of SG required was therefore:

    Super guarantee

    = OTE x SG rate

    = cents per km earnings (less overtime allowance) x SG rate

    = $1,375.13  x 9%

    = 123.76  

    To remove the overtime allowance, divide this amount by 1.2

    = 123.76 ÷ 1.2

    = $103.13

    End of example

     

    Example 8: Casual employee, using the cents-per-kilometre method

    Tom, a casual Grade 6 long distance driver, travelled from Perth to Adelaide via the Eyre Highway (2,677km) and was paid using the cents-per-kilometre method under the Road Transport (Long Distance Operations) Award 2010. The cents-per-kilometre rate was 36.68c/km for full-time employees (from 1 July 2011). Casual employees are paid an additional 15%. The rate included two components:

    • an industry disability allowance of 1.3 times a base rate
    • an overtime allowance of 1.2 times a base rate.

    Joe received 42.18c/km (36.68c/km + 15%) x 2,677km = $1,129.16

    As this amount was in excess of the minimum guaranteed payment, Joe's employer used his remuneration to work out his OTE. They removed the overtime allowance from the calculations as that component was not considered to be a payment for ordinary hours of work. The calculation to determine the minimum amount of SG required was therefore:

    Super guarantee

    = OTE x SG rate

    = cents per km earnings (less overtime allowance) x SG rate

    = $1,129.16 x 9%

    = 101.62 

    To remove the overtime allowance, divide this amount by 1.2

    = 101.62 ÷ 1.2

    = $84.68

    End of example

    See also:

      Last modified: 27 Jul 2016QC 44710