What payments are qualifying earnings

Which payments count as qualifying earnings for super guarantee from 1 July 2026.

Published 18 November 2025

Payday Super starts on 1 July 2026

The information on this page applies to super guarantee payments from 1 July 2026.

Some regulations and law for Payday Super are still being considered by Parliament. For progress updates see Payday superannuation legislation.

What are qualifying earnings

Qualifying earnings (QE) is a new term for the types of payments you make to employees that are used to calculate the super guarantee (SG) under Payday Super.

What qualifying earnings means for employers

From 1 July 2026, all employers will use qualifying earnings as the base to calculate both the SG amount and the super guarantee charge (SGC). Currently employers calculate SG and SGC on different earnings bases.

For many employers, the new concept of qualifying earnings doesn’t change the amount of SG you are currently paying for your employees.

Most employees are eligible for SG. Independent contractors paid mainly for their labour are considered employees for SG purposes.

What amounts count as qualifying earnings

Qualifying earnings include the following.

Ordinary time earnings (OTE), 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 OTE under Payday Super.
All commissions paid to an employee.
Salary sacrifice amounts that would qualify as qualifying earnings had they not been sacrificed to superannuation.
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 payments are covered only once to the extent of the overlap in categories.

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. Find out what payments are considered OTE.

The following tables are non-exhaustive lists of common amounts employers pay. They indicate which amounts are considered OTE for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA). Any OTE amounts are included in qualifying earnings.

You can use these tables to help you work out the minimum SG contribution for your employees.

How you work out OTE 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 OTE.

Gross

Table 1: Gross
Payment	OTE (for the purposes of SGAA)	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 (TOIL)	Yes	Yes
Breach of break paymentsExternal Link, such as for rest, meal and crib: 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

Example: ordinary hours of work not stated

Kim works in a call centre. Under her contract she works a minimum number of hours per week. She also works extra shifts when needed, though there is no clear pattern to this.

There is no award or agreement that specifies Kim's ordinary hours of work, and she is not paid overtime rates for her extra shifts.

All of Kim's wages are OTE. As there are no stipulated ordinary hours of work, and no pattern of regular or usual hours, Kim's ordinary hours of work are all the hours she actually works. All of Kim's wages are therefore also qualifying earnings.

End of example

Example: piece rates where no ordinary hours stated

Evan works part time as a fruit picker for Golden Fruit Farm Pty Ltd. He is paid 15 cents for every kilogram of apples he picks. There are no ordinary hours specified in any award or agreement.

Evan picks 5,000 kilograms of apples in his 30 working hours in the week and is paid $750 by Golden Fruit Farm Pty Ltd, as the piece rate amount is higher than his minimum wage guarantee under the Horticulture Award.

The $750 paid to Evan is OTE. As his ordinary hours of work are not specified in any award or agreement, his ordinary hours of work are the hours that he actually works. The $750 paid to Evan is therefore also qualifying earnings.

End of example

Paid leave and other payments

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

Other paid leave (paid leave type O)

Table 2: Other paid leave (paid leave type O)
Payment	OTE (for the purposes of SGAA)	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 scheme	Yes	Yes
Long service leave that is paid 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 (TOIL) 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 (paid leave type P)

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

Payment	OTE (for the purposes of SGAA)	Qualifying earnings
Employer paid parental leaveExternal Link, such as maternity leave, paternity leave or adoption leave	No	No
Government paid parental leave (GPPL)	No	No

Workers' compensation (paid leave type W)

When considering workers’ compensation for OTE purposes, 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 (paid leave type W)
Payment	OTE (for the purposes of SGAA)	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 (paid leave type A)

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

Table 5: Ancillary and defence leave (paid leave type A)
Payment	OTE (for the purposes of SGAA)	Qualifying earnings
Community service leaveExternal Link, including voluntary emergency management activities for bodies such as a State Emergency Service, Country Fire Authority and 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 (paid leave type C)

Table 6: Cash out of leave in service (paid leave type C)
Payment	OTE (for the purposes of SGAA)	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 TOIL of overtime pay in service	No	No

Unused leave on termination (paid leave type U)

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

Table 7: Unused leave on termination (paid leave type U)
Payment	OTE (for the purposes of SGAA)	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	OTE (for the purposes of SGAA)	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

Example: expense allowance expected to be used in full

Matteo is paid a tool allowance under the Joinery and Building Trades AwardExternal Link. It is expected that Matteo will use the whole allowance to supply and maintain his tools.

Matteo’s employer doesn't make SG contributions on the tool allowance as it is not a reward for the services which he is providing as an employee of the company. The tool allowance is not OTE and does not fall under any other specific inclusions under the qualifying earnings definition. It will not be included in Matteo's qualifying earnings.

End of example

Overtime

OvertimeExternal Link payments are not OTE, provided the employee's ordinary hours of work are clearly identified in the 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.

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	OTE (for the purposes of SGAA)	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 lieu (TOIL)External Link – cash out of TOIL in service For unused TOIL on termination, see termination payments	No	No
On call allowance for hours outside ordinary hours of work	No	No
Call back allowance	No	No

Example: overtime identified in an award or agreement

Pierre is employed under an award to work 38 ordinary hours per week with additional reasonable overtime. However, Pierre’s roster includes shifts with planned overtime. He works a total of 48 hours per week, including 10 hours of overtime paid at overtime rates.

The payment to Pierre for his 38 ordinary hours of work is OTE.

The payment for the 10 hours of overtime is not OTE and does not fall into any other categories of qualifying earnings. The overtime payments will not be included in Pierre's qualifying earnings.

End of example

Bonuses and commissions

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

Table 10: Bonuses and commissions
Payment	OTE (for the purposes of SGAA)	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 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

Example: bonus paid in respect of overtime

Jessie is in IT, on an above award annual salary which includes payment for reasonable additional hours. His ordinary hours are Monday to Friday. As part of a project, Jessie works on Sunday. As a reward for meeting a project milestone which was entirely due to the work completed on Sunday, members of the team are each paid a $1,000 bonus.

As the bonus is being paid in respect of work that was done entirely outside of ordinary hours, the $1,000 is overtime and not OTE. The $1,000 overtime will not be included in Jessie's qualifying earnings.

End of example

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 as 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	OTE (for the purposes of SGAA)	Qualifying earnings
Remuneration you pay to a working director	Yes	Yes
Remuneration you pay to a non-working director	Yes	Yes

Lump sum payments

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

Payments in arrears (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, OTE is 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 is OTE (and therefore qualifying earnings).

Return to work payments (lump sum W)

Table 12: Return to work payments (lump sum W)
Payment	OTE (for the purposes of SGAA)	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 OTE.

Table 13: Termination payments
Payment	OTE (for the purposes of SGAA)	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 (TOIL) 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

Example: termination of employment due to genuine redundancy

Michael's job is no longer required to be performed. His job is now redundant, and after consulting with Michael, his employer pays him a genuine redundancy on 14 October 2025. It totals $40,000 and comprises:

payment of $10,000 in lieu of notice for 4 weeks of wages
redundancy payment of $25,000
ex-gratia payment of $5,000.

Out of the total payment of $40,000 only the $10,000 payment in lieu of notice is QE. Michael's employer must pay SG on the payment in lieu of notice, and works out the SG as follows:

$10,000 × 12% = $1,200.

End of example

Salary sacrifice contributions

Amounts that you paid 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

Other amounts included in qualifying earnings for super guarantee

Other amounts included in qualifying earnings for super guarantee are:

all commissions paid to an employee, including commissions solely for work performed entirely outside ordinary hours
payments made to workers who fall under the expanded definition of employee for SG purposes, such as independent contractors paid mainly for their labour, artists, musicians, sportspersons and statutory office holders.

Maximum contributions base

Once your employee earns more than the maximum contribution base, you do not need to make further SG contributions.

Super guarantee opt out for high-income earners with multiple employers

Check if you can opt out of receiving super guarantee from some employers to avoid exceeding the contributions cap.

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