Edited version of administratively binding advice

Authorisation Number: 1012286093027

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Advice

Subject: Superannuation guarantee

Question 1

Do the ordinary hours as defined in a clause of the Agreement form part of the ordinary time earnings (OTE) of the employees of the employer?

Advice

Yes, the ordinary hours of as defined in a clause of the Agreement do form part of the OTE of the employees of the employer.

Question 2

Do the ordinary hours of X hours per day contribution to Rostered Days Off (Y hours per week) as defined in a clause of the Agreement form part of the OTE of the employees of the employer?

Advice

No, the ordinary hours of X hours per day contribution to Rostered Days Off (Y hours per week) as defined in a clause of the Agreement do not form part of the OTE of the employees of the employer.

Question 3

Does the Annual Leave defined in a clause of the Agreement and Personal Leave defined in a clause of the Agreement form part of the OTE of the employees of the employer.

Advice

Yes, the Annual Leave defined in a clause of the Agreement and Personal Leave defined in a clause of the Agreement does form part of the OTE of the employees of the employer.

Question 4

Do Rostered Days Off (RDO's) paid during Rest and Recreation (R&R) week or on termination of employment as defined in a clause of the Agreement form part of the OTE of the employees of the employer?

Advice

Yes, the RDO's paid during R&R week or on termination of employment as defined in a clause of the Agreement does form part of the OTE of the employees of the employer.

Question 5

Do the overtime hours defined in a clause of the Agreement form part of the OTE of the employees of the employer?

Advice

No, the overtime hours defined in a clause of the Agreement do not form part of the OTE of the employees of the employer.

Question 6

Does the Paid Break defined in a clause of the Agreement form part of the OTE of the employees of the employer?

Advice

Yes, the Paid Break defined in a clause of the Agreement does form part of the OTE of the employees of the employer.

Question 7

Does the Crib Break defined in a clause of the Agreement form part of the OTE of the employees of the employer?

Advice

No, the Crib Break defined in a clause of the Agreement does not form part of the OTE of the employees of the employer.

Question 8

Which of the following allowances as defined in a clause of the Agreement form part of the OTE of the employees of the employer?

· All Purpose Allowance

· Flat Allowance - Daily Travel Allowance

· Flat Allowance - Supplementary Travel Allowance

· Flat Allowance - Meal Allowance

· Flat Allowance - First Aid Allowance

Advice

The following allowances as defined in a clause of the Agreement form part of the OTE of the employees of the employer:

· All Purpose Allowance

· Flat Allowance - Daily Travel Allowance

· Flat Allowance - Supplementary Travel Allowance

· Flat Allowance - First Aid Allowance

· The Flat Allowance - Meal Allowance as defined in a clause of the Agreement does not form part of the OTE of the employees of the employer.

Question 9

Does the Location Allowance defined in a clause of the Agreement form part of the OTE of the employees of the employer?

Advice

Yes, the Location Allowance defined in a clause of the Agreement does form part of the OTE of the employees of the employer in respect of X ordinary hours of work.

Question 10

Does the Living Away From Home Allowance (LAFHA) defined in a clause of the Agreement form part of the OTE of the employees of the employer

Advice

No, the LAFHA defined in a clause of the Agreement does not form part of the OTE of the employees of the employer.

This advice applies for the following period:

31 July 2012 to 30 June 2013

The arrangement commences on:

31 July 2012

Relevant facts and circumstances

Your advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are significantly different from these facts, this advice has no effect and you cannot rely on it. The fact sheet has more information about relying on ATO advice.

The Commissioner received a request for advice from the employer with respect to their superannuation obligations under an employment agreement.

The employer requested advice in respect of the following categories covered in the employment agreement and if the payments in respect of if these categories formed part of OTE:

· Base hours

· Base hours

· Overtime (1.5x)

· Overtime (2x)

· Paid Break (1x)

· Crib Break (2x)

· Flat allowance - All purpose allowance

· Flat allowance - Travel allowance

· Flat allowance - Meal allowance

· Flat Allowance - First aid allowance

· Flat allowance - Location allowance

· Rostered days off (RDO) paid in rest and recreation week

· Annual leave

· Personal leave

· Living away from home allowance

We wrote to the employer to request clarification of the following details:

Explanation of your questions 1 and 2 - Base hours

Confirmation that the crib break referred to in question 6 related to the paid meal break and/or the additional pay at double time.

Details of the standard roster cycle and start day of the roster cycle.

We received the employer's response and the information provided is detailed below:

Questions 1 and 2 relate to base hours and base hours referred to at a clause of the agreement contributing to RDO's

Question 6 (Crib break) refers to the crib break at the end of the working day (after 10 hours) paid at double time.

The standard roster cycle is 4 weeks, 1 week off

The start of a Rostered Cycle is Monday to Saturday.

The Agreement included information in relation to definitions, hours of work, sample rosters, rostered days off, work breaks and patterns, living away from home provisions, allowances and leave provisions.

Relevant legislative provisions

Superannuation Guarantee Administration Act 1992 Subsection 6(1),

Superannuation Laws Amendment (2004 Measures No 2) Act 2004, and

Fringe Benefits Tax Assessment Act 1986.

Reasons for decision

The Superannuation Laws Amendment (2004 Measures No 2) Act 2004 simplified the earnings base of an employee for SGAA purposes. These amendments which apply from 1 July 2008 have the effect that all employers need to calculate their SGAA liability against an employee's OTE, as defined in the SGAA.

In effect this means employers can no longer use earnings bases specified in industrial awards, superannuation schemes, occupational superannuation arrangements or a law of the Commonwealth, State or Territory to satisfy their requirements in meeting their SGAA liability.

From 1 July 2008, employers may still be required to use notional earnings bases specified in legislation or industrial agreements as the basis of their superannuation support in cases where these are above an employee's OTE, but SGAA obligations will only be assessed against OTE.

OTE, in relation to an employee, is defined in subsection 6(1) of the SGAA and is the lesser of:

· the total of the employee's earnings in respect of ordinary hours of work and earnings consisting of over award payments, shift loading or commission, but does not include lump sum payments made on termination of employment in lieu of unused sick leave, unused annual leave and unused long service leave; or

· the maximum contribution base for the quarter - the maximum contribution base, which is the maximum limit on the amount of superannuation support that an employer is expected to provide for the benefit of an employee. The maximum contribution base for the 2011/12 year of income is $43,820 per quarter. This amount is indexed annually according to the indexation factor.

The Commissioner's views on OTE generally, including an employee's ordinary hours of work, are included in Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages'.

Paragraph 12 of SGR 2009/2 provides the meaning of 'earnings' and states:

· An employee's 'earnings' for the purpose of the definition of OTE, is the remuneration paid to the employee as a reward for the employee's services. The practical effect for superannuation guarantee purposes is that the expression 'earnings' means 'salary or wages'.

Paragraphs 13 to 18 of SGR 2009/2 address the meaning of 'ordinary hours of work' and state:

13. An employee's ordinary hours of work' are the hours specified as his or her 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.

14. The document need not use the exact expression 'ordinary hours of work', but it needs to draw a genuine distinction, for the purposes of the award or agreement, between ordinary hours and other hours. In particular, it would be expected that the other hours are remunerated at a higher rate (typically described as overtime) than the ordinary hours, or otherwise identifiable as a separate component of the total pay in respect of non-ordinary hours.

15. Any hours worked in excess of, or outside the span (if any) of, those specified ordinary hours of work are not part of the employees 'ordinary hours of work'.

16. 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 in all the circumstances of the case. This is not necessarily the minimum or maximum number of hours worked or required to be worked.

17. In such cases, it may often not be possible or practicable to determine the normal, regular, usual or customary hours of an employee's work. If so, the actual hours worked should be taken to be the ordinary hours of work.

18. 'Ordinary hours of work' are not necessarily limited to hours to be worked between 9am and 5pm, Monday to Friday. They may (depending on the provision in the relevant award or agreement, if any) include hours to be worked at other times, including at night, on weekends or on public holidays.

Paragraphs 20 to 22 identify payments that are specifically included in the definition of 'ordinary time earnings' in subsection 6(1) of the SGAA. Paragraphs 20 to 22 state:

20. Earnings consisting of over-award payments, shift-loadings or commission are specifically included in the definition of OTE by subparagraph (1)(ii) of that definition in subsection 6(1).

Over-award payments

21. An over-award payment is the component of a payment in excess of an award entitlement. The Commissioner's view is that the specific inclusion of these payments does not apply to over-award payments that are specifically referrable to hours worked that are not ordinary time hours. For example, an employer's policy may be to offer a higher rate of overtime pay for some overtime hours worked than the penalty rate required by an award. Even though technically over-award payments, such as additional payments would not be OTE under subparagraph (a)(ii) of the definition of OTE in subsection 6(1).

Shift-loading

22. A shift loading is an amount paid to a worker in addition to his or her basic hourly rate for having to work outside the usual span of time for day workers. Shift-loadings payable on ordinary hours of work must be distinguished from overtime payments under awards and agreements. Often these are mutually exclusive under awards and agreements, but if an employee is entitled to a shift-loading in respect of hours other than ordinary hours of work, the Commissioner's view is that the specific inclusion of shift-loadings does not apply in that circumstance.

Paragraphs 25 and 26 of SGR 2009/2 specify that earnings 'in respect of ordinary hours of work' means all earnings other than overtime. Paragraphs 25 and 26 state:

25. All amounts of earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remunerated for working overtime hours, or are otherwise referrable only to overtime or to other hours that are not ordinary hours of work. There is no such thing as earnings that are merely in respect of employment generally and are not OTE because they are not in respect of any particular hours of work.

26. An award or agreement may itself have a definition of 'ordinary time earnings' that purports to apply for superannuation purposes. However, the central question posed by the definition of OTE in the SGAA is what amounts are 'earnings in respect of ordinary hours of work'. This could in some cases a different amount from any purported amount of 'OTE' in the award or agreement. As mentioned in paragraph 13 of this ruling, the Commissioner accepts that 'ordinary hours of work' are as determined by the relevant award or agreement, but that does not imply that OTE itself is necessarily as determined by the award or agreement.

Paragraphs 27 to 40 of SGR 2009/2 identify certain specific payments that are OTE. These certain specific payments include allowances and loadings, bonuses, piece rates, paid leave and holiday pay, top-up payments, payments in lieu of notice, workers' compensation payments (where the employee is required to work) and directors fees.

Paragraph 27 of SGR 2009/2 relates to allowances and loadings and states:

27. Many employees receive various additional payments that are described as allowances or loadings and that are paid to employees to recognise or compensate for certain conditions relating to their employment. Examples:

· a 'site allowance' paid fortnightly at a flat rate in acknowledgement of the displacement an employee undergoes when a job requires him or her to work in a remote location;

· a 'casual loading' of 20% of the basic ordinary time rate of pay paid to a casual worker in lieu of any fixed, regular minimum hours of work and of paid leave entitlements;

· a 'dirt allowance' paid as a flat rate in acknowledgement of the conditions in which the work is undertaken; and

· a 'freezer allowance' paid at the rate of an extra $2.50 per hour to employees, such as some supermarket employees, who perform most of their duties in cold storage facilities.

These kinds of payment are OTE except to the extent that they:

· are not 'salary or wages', for example if they are payments of a predetermined amount to offset or reimburse particular expenses…..

· relate solely to hours of work other than ordinary hours (see paragraphs 41 to 42 of this Ruling).

Paragraphs 32 to 36 of SGR 2009/2 relate to paid leave and holiday and state:

32. Subject to the exclusions mentioned at paragraph 34 of this Ruling, salary or wages that an employee receives, at or below his or her normal rate of pay for ordinary hours of work, in respect of paid leave is simply a continuation of his or her ordinary time pay. It is OTE. It does not matter whether the entitlement to take the paid leave accrued gradually over time, arose in a specified circumstance or following a specified event, or was simply granted to the employee in the exercise of the employer's discretion.

33. Similarly, salary or wages received at the ordinary time rate in respect of public holidays, rostered days off and the like is OTE.

34. However, payments made while a worker is on paid parental leave, or other kinds of ancillary leave are not OTE as these types of leave payments are excluded from being 'salary or wages' in the SGAA by Regulation 7AD of the Superannuation Guarantee (Administration) Regulations 1993 (SGAR)…….

35. The principle in paragraph 32 of this Ruling does not extend to extra payments by way of 'leave loadings', and like payments, that are demonstrably referrable to a notional loss of opportunity to work overtime, or similar.

36. Lump sum arrears payments of unused leave or salary or wages otherwise than on termination of employment are also OTE.

Paragraphs 41 to 46 of SGR 2009/2 relate to certain specific kinds of payments that are not OTE. These certain specific kinds of payments include overtime, on-call allowances and certain payments that are not salary or wages.

Paragraphs 41 to 43 of SGR 2009/2 relate to overtime and state:

41. Payments for work performed during hours outside an employee's ordinary hours of work are not OTE.

42. This is so whether the payments are calculated at an hourly rate or the employee gets a specific loading, or an annualised or lump sum component of a total salary package, that is expressly referrable to overtime hours or as remuneration for overtime hours worked.

43. However, some employees, particularly some managers and professionals, receive a single undissected annual salary within a remuneration package that recognises in a non-specific way that the employee may often be expected to work more than the ordinary hours of work prescribed. The whole amount of salary payable under such a package is OTE, unless overtime amounts are distinctly identifiable as mentioned in paragraph 42 of this Ruling.

Paragraph 46 of SGR 2009/2 relates to certain payments that are not salary and wages and states:

46. The following payments are not salary or wages for SGAA purpose and thus are not OTE:

· certain private or domestic payments….

· payments specifically excluded by the SGAA from being salary or wages for the purposes of calculating superannuation guarantee shortfalls….

· fringe benefits and other non-cash payments….

· some workers' compensation payments….

· expense allowance payments and reimbursement of expenses incurred for the employer….

· redundancy payments….

· payments for unfair dismissal….

Paragraph 58 of SGR 2009/2 relates to fringe benefits and other non-cash payments which are excluded from the definition of 'salary and wages'. Paragraph 58 states:

58. Fringe benefits as defined in the Fringe Benefits Tax Assessment Act 1986 (FBTAA) are excluded under subsection 11(3) of the SGAA. Additionally, the Commissioner takes the view that other 'benefits', within the meaning of the FBTAA, given by employers to employees that are neither fringe benefits nor salary or wages within the meaning of that Act are not salary or wages for SGAA purposes……

Paragraph 65 of SGR 2009/2 provides that all allowances, except allowances form part of an employee's salary and wages. Paragraph 65 of SGR 2009/2 states:

65. For the purposes of the SGAA, all allowances, except expense allowances that are fringe benefits under the FBTAA, received by an employee, are included in 'salary and wages'……

Paragraph 72 of SGR 2009/2 relates to expense allowances and provides that these allowances do not form part of an employee's salary or wages. Paragraph 72 of SGR 2009/2 states:

72. Expense allowances, that is, those allowances paid to an employee with a reasonable expectation that the employee will fully expend the money in the course of providing services, are not 'salary or wages'.

Application of the law to your circumstances

In your application you have requested advice on if certain payments made to employees under specific clauses of the Agreement form part of the employees OTE.

Question 1 - Base Hours

Summary

The Ordinary Hours defined in a clause 3 of the Agreement do form part of the employee's OTE.

Detailed Reasoning

Under paragraph 13 of SGR 2009/2, an employee's ordinary hours of work are the hours specified as his or her ordinary hours of work under the relevant award or agreement.

Under a clause of the Agreement, the employees Ordinary Hours are defined as X hours worked Monday to Friday, consisting of Y paid hours plus Z hours contribution to Rostered Days Off.

The Agreement sets out the working hours. A clause states working hours within the work cycle will generally be arranged as X hours on Monday to Friday and Y hours on Saturday, and include Ordinary Hours and rostered overtime……

A clause provides examples of the operation of hours of work. The employees rostered ordinary hours from Monday to Friday are X hours (being Y Ordinary Hours and Z hours RDO accrual) and X hours overtime.

SGR 2009/2 provides that earning in respect of ordinary hours of work means all earnings other than overtime.

Paragraph 25 of SGR 2009/2 states:

All amounts of earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remunerated for working overtime hours, or are otherwise referrable only to overtime or to other hours that are not ordinary hours of work…….

As the Base Hours of X hours are the employees' ordinary hours of work, the earnings in respect of these hours do form part of the employees' OTE.

Question 2 - Base Hours (4 hours)

Summary

The Ordinary Hours contribution to RDO's defined in a clause of the Agreement do not form part of the employees OTE.

Detailed Reasoning

Under a clause of the Agreement the employees' accrue X hours per day toward RDO's.

Under a clause of the Agreement the employees will have the option of having their RDO's accrued and paid out during their R&R week or upon termination of employment.

Paragraph 12 of SGR 2009/2 provides that an employee's earnings for the purpose of defining OTE is the remuneration paid to the employee as a reward for their services. For superannuation guarantee purposes this means the employees salary or wages.

As the employees do not receive any remuneration in respect to the accrual of the RDO's, the ROD accrual does not form part of their OTE.

Question 3 - Annual Leave and Personal Leave

Summary

The Annual Leave and Personal Leave defined in a clause of the Agreement do form part of the employees OTE.

Detailed Reasoning

Under a clause of the Agreement all employees, other than casual employees, are entitled to paid annual leave at their Base Hourly Rate.

Under a clause of the Agreement all employees, other than casual employees, are entitled to paid personal leave to be paid at their Base Hourly Rate.

Under paragraph 32 of SGR 2009/2, salary and wages paid to an employee in respect of periods of paid leave is simply a continuation of the employee's ordinary time pay and forms part of OTE.

Therefore, Annual Leave and Personal Leave paid to employees under a clause of the Agreement do form part of the employees OTE.

Question 4 - RDO's paid in R&R week or on termination of employment

Summary

RDO's paid during R&R week or on termination of employment under a clause of the Agreement do form part of the employees OTE.

Detailed Reasoning

Under a clause of the Agreement, the employees Ordinary Hours are defined as X hours worked Monday to Friday, consisting of Y paid hours plus Z hours contribution to Rostered Days Off.

A clause of the Agreement provides that employees have the option of having their RDO's accrued and paid out during their R&R period or upon termination of their employment.

Paragraphs 32 and 33 of SGR 2009/2 relate to paid leave and holiday pay. Paragraph 32 provides that salary or wages paid to an employee in respect of periods of paid leave is simply a continuation of his or her ordinary time pay and does form part of OTE.

Paragraph 33 of SGR 2009/2 states:

Similarly, salary or wages received at the ordinary time rate in respect of public holidays, rostered days and the like is OTE.

As the employees receive RDO's at their ordinary time rate, this payment does form part of the employees' OTE.

Question 5 - Overtime (1.5x) and Overtime (2x)

Summary

Overtime paid under a clause of the Agreement does not form part of the employees' OTE.

Detailed Reasoning

The Agreement sets out the overtime rates that apply to the employees.

A clause of the Agreement specifies the Project Working Hours which provides that the employees will work rostered overtime.

A clause provides that employees engaged under an Ordinary Work Day will work Y hours overtime at time and a half Monday to Saturday and X hours overtime at double time on a Saturday.

Employees engaged under Shift Work will work Y hours overtime at double time Monday to Friday and Z hours overtime on Saturdays and Sundays at double time.

Under paragraph 25 of SGR 2009/2 all earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remunerated for working overtime hours, or are referrable only to overtime or to other hours that are not ordinary hours of work.

Paragraphs 41 and 42 of SGR 2009/2 relate to overtime payments and state:

41. Payments for work performed during hours outside an employee's ordinary hours of work are not OTE.

42. This is so whether the payments are calculated at an hourly rate or the employee gets a specific loading, or an annualised or lump sum component of a total salary package, that is expressly referrable to overtime hours or as remuneration for overtime hours worked.

As the earnings in respect of overtime are performed for work during hours that are outside of the employees' ordinary hours of work, these earnings do not form part of the employees OTE.

Question 6 - Paid Break

Summary

The paid break paid under a clause of the Agreement does form part of the employees OTE.

Detailed Reasoning

A clause of the Agreement provides that the employees work day between Monday to Friday is divided into three work periods separated by two breaks. One break will be paid and the other break will be unpaid.

Under SGR 2009/2, all earnings in respect of ordinary hours of work will be OTE.

Paragraph 25 of SGR 2009/2 states:

25. All amounts of earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remunerated for working overtime hours, or are otherwise referrable only to overtime or to other hours that are not ordinary hours of work. There is no such thing as earnings that are merely in respect of employment generally and are not OTE because they are not in respect of any particular hours of work.

As the paid break referred to in a clause of the Agreement relates to the employees ordinary hours of work, the payment in respect of this break does form part of the employees OTE.

Question 7 - Crib Break Overtime

Summary

The break paid under a clause of the Agreement does not form part of the employees OTE.

Detailed Reasoning

A clause of the Agreement provides that employees, who work more than X hours overtime after working Ordinary Hours, from Monday to Friday inclusive, are entitled to a crib break at the applicable rate of pay, or to be paid X minutes at double time in lieu of that additional crib break.

Under paragraph 25 of SGR 2009/2, all amounts of earnings are in respect of the employees ordinary hours of work unless they are remunerated for working overtime hours, or are referrable only to overtime hours.

The payment of the additional crib break is conditional upon the employee having completed two hours of overtime. Therefore, the payment in respect of the additional crib break is attributable to overtime hours and does not form part of the employees OTE.

Question 8 - Allowances

Summary

The following allowances defined in the Agreement form part of the employees OTE:

· All Purpose Allowance

· Flat Allowance - Daily Travel Allowance

· Flat Allowance -Supplementary Travel Allowance

· Flat Allowance - First Aid Allowance

· The Flat Allowance - Meal Allowance defined in the Agreement does not form part of the employees OTE.

Detailed Reasoning

All Purpose Allowance

Under a clause of the Agreement, employees are paid an All Purpose Allowance which is added to the Base Hourly Rate for the purposes of calculating overtime or paid leave.

SGR 2009/2 provides that certain specific kinds of payments form part of an employee's OTE. Under paragraph 27 of SGR 2009/2 allowances and loadings are one of these specific kinds of payment.

Paragraph 27 of SGR 2009/2 states:

27. Many employees receive various additional payments that are described as allowances or loadings and that are paid to employees to recognise or compensate for certain conditions relating to their employment. Examples:

· a 'site allowance' paid fortnightly at a flat rate in acknowledgement of the displacement an employee undergoes when a job requires him or her to work in a remote location;

· a 'casual loading' of 20% of the basic ordinary time rate of pay paid to a casual worker in lieu of any fixed, regular minimum hours of work and of paid leave entitlements;

· a 'dirt allowance' paid as a flat rate in acknowledgement of the conditions in which the work is undertaken; and

· a 'freezer allowance' paid at the rate of an extra $2.50 per hour to employees, such as some supermarket employees, who perform most of their duties in cold storage facilities.

These kinds of payment are OTE except to the extent that they:

· are not 'salary or wages', for example if they are payments of a predetermined amount to offset or reimburse particular expenses…..

· relate solely to hours of work other than ordinary hours (see paragraphs 41 to 42 of this Ruling).

The All Purpose Allowance is not a payment that is provided to offset or reimburse a particular expense and is not paid in relation to hours of work other than ordinary hours, and thereby is not excepted from forming part of the employees OTE as described above.

Therefore, the All Purpose Allowance does form part of the employees OTE.

Flat Allowances

Under the Agreement, employees are paid various Flat Allowances as separate stand alone payments in addition to their Base Hourly Rate. The flat allowances do not form part of the Base Hourly Rate for the purpose of calculating overtime or paid leave.

Travel Allowance

Under a clause of the Agreement, employees are paid a Daily Travel Allowance and for some employees, also a Supplementary Travel Allowance.

Both the Daily Travel Allowance and Supplementary Travel Allowance are provided to the employees to recognise or compensate for certain conditions relating to their employment. Neither travel allowance can be attributed to cover only the expense of travel that the employee is expected to fully expend in the course of providing their services.

The Daily Travel Allowance includes reimbursement for all costs, expenses and inconvenience incurred with any travel from the provided accommodation.

The Supplementary Travel Allowance is provided as a reimbursement of additional travel time and expense incurred getting to and from the provided transit pick up locations.

The travel allowances are paid to the employees to compensate them for the conditions relating to their employment.

Paragraph 27 of SGR 2009/2 provides that additional payments that are described as allowances that are paid to compensate employees for certain conditions relating to their employment do form part of OTE.

Therefore, the Daily Travel Allowance and the Supplementary Travel Allowance do form part of the employees OTE.

Meal Allowance

A clause of the Agreement provides that employees who are not supplied board and lodgings by the employer will receive a Meal Allowance where they are required to work X hours or more overtime outside the working hours, Monday to Friday or more than Y hours overtime on either a Saturday or Sunday. The meal allowance is paid if the employee has not received prior notice of this from at least the previous day.

Paragraph 27 of SGR 2009/2 provides that additional payments that are described as allowances that are paid to compensate employees for certain conditions relating to their employment form part of OTE except in cases where the payment relates solely to hours of work other than other ordinary hours of work.

As the Meal Allowance is provided after employees have worked a specific amount of overtime, the Meal Allowance is not paid in respect of the employees ordinary hours of work.

Therefore, the Meal Allowance does not form part of the employees OTE.

First Aid Allowance

Under a clause of the Agreement, employees who are appointed as a first aid attendant by the employer will receive weekly First Aid Allowance. The First Aid Allowance is an allowance to compensate appointed employees for this condition of their employment.

Paragraph 27 of SGR 2009/2 provides that additional payments that are described as allowances that are paid to compensate employees for certain conditions relating to their employment do form part of OTE.

Therefore, the First Aid Allowance does form part of the employees OTE.

Question 9 - Location Allowance

Summary

The Location Allowance paid under a clause of the Agreement forms part of the employees OTE in respect of the accrual relating to their Ordinary Hours of work.

The Location Allowance paid under a clause of the Agreement does not form part of the employees OTE in respect of the accrual relating to their overtime hours.

Detailed Reasoning

The Agreement provides that employees may receive an accrual of the Location Allowance per hour worked on site and is paid when employees take their R&R Allowance.

A clause of the Agreement states the Location Allowance accrues for all hours worked and does not accrue during any period of leave.

Paragraph 25 of SGR 2009/2 provides that only the earnings in respect of the employee's ordinary hours of work form part of their OTE.

Paragraph 25 of SGR 2009/2 states:

All amounts of earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remunerated for working overtime hours, or are otherwise referrable only to overtime or to other hours that are not ordinary hours of work. There is no such thing as earnings that are merely in respect of employment generally and are not OTE because they are not in respect of any particular hours of work.

Paragraphs 41 and 42 of SGR 2009/2 state:

41. Payments for work performed during hours outside an employee's ordinary hours of work are not OTE.

42. This is so whether the payments are calculated at an hourly rate or the employee gets a specific loading, or an annualised or lump sum component of a total salary package, that is expressly referrable to overtime hours or as remuneration for overtime hours worked.

The Location Allowance accrues for both the employees' ordinary hours of work and also the overtime hours.

Paragraph 25 of SGR 2009/2 provides that the earnings in respect of the employees' ordinary hours of work form part of their OTE.

Paragraph 41 and 42 of SGR 2009/2 provides that earnings in respect of work performed outside the employees ordinary hours of work are not OTE.

Therefore, the Location Allowance that accrues in respect of the employees X ordinary hours of work forms part of their OTE when the allowance is paid to the employees.

Question 10 - Living Away From Home Allowance

Summary

The LAFHA paid to the employees under a clause of the Agreement does not form part of the employees OTE.

Detailed Reasoning

Under a clause of the Agreement, Non-Local Employees will be provided with either accommodation at the project village, or if that is unavailable, a motel or hotel style room with meals supplied or a LAFHA where an Employee mobilises his or her partner and/or family to the region for the duration of the Project.

Miscellaneous Taxation Ruling MT 2030 Fringe Benefits: Living-away-from-home allowance benefits explains that a LAFHA exists where it is reasonable to conclude from the circumstances that some or all of the allowance is in the nature of compensation to the employee for additional expenses incurred and/or other disadvantages suffered, because the employee is required to live away from his or her usual place of residence in order to perform the duties of their employment.

The Employees who relocate with their partner and/or family are paid a LAFHA. The LAFHA is paid to compensate the Employee for expenses incurred whilst they are living away from their usual place of residence in order to perform their employment-related duties and therefore would constitute a fringe benefit under the Fringe Benefits Tax Assessment Act 1986.

Under paragraphs 46 and 58 of SGR 2009/2 fringe benefits are not salary or wages for SGAA purposes and thus are not OTE.

Conclusion

Provided below is a table to set out which components of the employees salary or wage as provided in the Agreement forms part of OTE.

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