Edited version of private advice

Authorisation Number: 1051604840638

Date of advice: 6 November 2019

Ruling

Subject: Superannuation guarantee - Ordinary hours of work

Questions

1.       Are earnings for work performed by Full Time Employment Contract employees, outside the spread of ordinary hours of work stipulated in an Industrial Award (the Award), considered ordinary time earnings (OTE) for the purpose of subsection 6(1) of the Superannuation Guarantee Administration Act 1992 (SGAA)?

2.     Are earnings for work performed by Permanent Employment Contract employees, outside the spread of ordinary hours of work stipulated in an Award, considered OTE for the purpose of subsection 6(1) of the SGAA?

3.     Are earnings for work performed by Part Time Employment Contract employees, outside the spread of ordinary hours of work stipulated in an Award, considered OTE for the purpose of subsection 6(1) of the SGAA?

4.     Are earnings for work performed by Casual employees, outside the spread of ordinary hours of work stipulated in an Award, considered OTE for the purpose of subsection 6(1) of the SGAA?

5.       Are earnings for all work performed on Saturday after 12pm and all day Sundays by employees categorised as shiftworkers, OTE for the purpose of subsection 6(1) of the SGAA?

Answer to questions 1 to 4

1.       All earnings for work performed by the specified classes of employees during the ordinary hours of work stipulated in the Award are OTE for the purpose of subsection 6(1) of the SGAA unless the total of hours worked exceed the specified average of 38 hours per week.

Answer to question 5

2.       No, as the Award prescribes, all work performed on Saturday after 12.00 pm and all day on Sunday will be paid at an overtime rate.

This advice applies for the following period

Ends on or after 30 June 2020

The arrangement commences on:

On or after 1 July 2016

Relevant facts and circumstances

All classes of employees considered by this administratively binding advice (ABA) are covered by the specified Industrial Award (the Award).

The Award

Prescribed hours of work

·        The Award states that a full -time employee is an employee who engaged to work an average of 38 ordinary hours per week.

·        The Award states that a part-time employee is an employee who engaged to work an average of fewer than 38 ordinary hours per week.

·        The Award states that a casual employee's ordinary hours of work are the lesser of an average of 38 hours per week or the hours required to be worked by the employer.

Ordinary hours of work

·        The Award defines the span of ordinary hours.

·        The Award defines a shiftworker, their ordinary hours of work and their shift loadings.

Overtime and penalty rates

·        The Award states that all time worked at the direction of the employer outside ordinary hours of work prescribed by this award will be paid for at the rate of:

(a)   time and a half for the first three hours and double time thereafter;

(b)   double time for all work on Saturday outside an employee's weekly hours; and

(c)   double time for all work performed on Sunday.

The Contractual Agreements

Your employees are engaged under one of the following employment contracts:

·        Full Time Employment Contract (FT Contract)

·        Permanent Employment Contract (Permanent Contract)

·        Part Time Employment Contract (PT Contract); and

·        A casual employment (Casual Contract)

Hours of work - FT Contract

·        The FT Contract states that a full time employee is required to work 37.5 hours per week, in accordance with the provided rostered.

Hours of work - Permanent Contract

·        The Permanent Contract states that a full time employee is required to work a minimum of 38 hours per week within the defined span of rostered hours.

Hours of work - PT Contract

·        The PT Contract states that a part time employee is required to work in accordance with the provided rostered hours.

Hours of work - Casual Contract

·        The Casual Contract states that casual employees are engaged as required and work in accordance with the provided rostered hours.

Relevant legislative provisions

Superannuation Guarantee (Administration) Act 1992 Subsection 6(1)

Reasons for decision

Summary

1.       As all of the contractual agreements for the specified classes of employees state that the hours of work are set through rostered hours, all earnings for work performed in the span of ordinary hours of work stipulated in the Award are OTE for the purpose of subsection 6(1) of the SGAA unless the total of hours worked exceed the specified average of 38 hours per week.

Detailed reasoning

2.       Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages'; explains the meaning of 'ordinary time earnings' (OTE) as defined in subsection 6(1) of the SGAA.

3.       As advised in this ruling the definition of OTE is relevant to employers for the purpose of calculating the minimum level of superannuation support required for individual employees under the SGAA.

4.       Paragraphs 10 and 11 of the SGR 2009/2 state that:

10. Ordinary time earnings, in relation to an employee, is defined in subsection 6(1) as:

(a) the total of:

(i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment:

(A) a payment in lieu of unused sick leave;

(B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997; and

(ii) earnings consisting of over-award payments, shift-loading or commission; or

(b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter - the maximum contribution base.

11. The SGAA does not define the expression 'earnings in respect of ordinary hours of work' or any of the terms in that expression.

5.       Paragraphs 13 and 18 of the SGR 2009/2 explain a meaning of 'ordinary hours of work':

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 employee's '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.

6.       Paragraphs 20 and 25 provide guidance on over-award payments and overtime. They state:

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

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

7.       Based on the provided information, all classes of employees considered by this ABA are covered by the same Award and also by separate employment contracts that are specific to the relevant employment classes (FT, Permanent, PT and Casual classes).

8.     The Award specifies the span of ordinary hours of work for employees.

9.     The Award defines when an employee will be categorised as a shiftworker and their ordinary hours can be worked in accordance with those shifts outlined in the clause.

10.    Shiftworkers are entitled to loadings for shiftwork.

11.    The Award limits the ordinary hours of work performed in four week cycle to an average of 38 hours per week.

12.    The Award states that all time worked at the direction of the employer outside ordinary hours of work prescribed by this award will be paid for at the overtime and penalty rates.

13.    All of the provided employment contracts for the individual classes of employees state that the employees are required to work in accordance with rostered hours to be provided, which may include hours outside the span of ordinary hours work specified in the Award.

14.    Based on this information all earnings for work performed by the specified classes of employees during the ordinary hours of work stipulated in the Award are OTE for the purpose of subsection 6(1) of the SGAA unless the total of hours worked exceed the specified average of 38 hours per week;

15.    The ordinary hours of work and the shift loading specified in the Award together with the overtime and penalty rates also listed in the Award, support the notion that all work performed by the specified classes of employees and shiftworkers after 12pm on Saturday and for all work on Sunday is overtime.

16.    As mentioned previously overtime is specifically excluded from being an OTE.

17.    For the above listed reasons, employees need to be categorised properly to ensure you are complying with your superannuation guarantee obligations. If a worker is rostered to work ordinary hours in accordance with the definition of a shiftworker, that sub-clause will determine ordinary hours and the other sub-clause will not apply to that employee. The information provided indicates employees can be rostered for a broad range of hours and their ordinary hours could be covered by either sub-clause.

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