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Edited version of your written advice
Authorisation Number: 1012768989600
Advice
Subject: Ordinary time earnings
Question 1
Are earnings for specialists for hours worked in ordinary hours (as defined in the Enterprise Agreement) while engaging in private practice (as defined in the Private Practice Agreement), considered OTE for the purposes of subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?
Advice
Yes, please see the 'Reasons for decision'.
Question 2
Are earnings for specialists for hours worked outside the ordinary hours (as defined in the Enterprise Agreement), while engaging in private practice (as defined in the Private Practice Agreement), considered OTE for the purposes of subsection 6(1) of the SGAA?
Advice
No, please see the 'Reasons for decision'.
This advice applies for the following period:
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
The arrangement commences on:
1 July 2014
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.
You employ specialists under the Enterprise Agreement.
Ordinary hours for specialists are described in the Enterprise Agreement.
Overtime for specialists is contained in the Enterprise Agreement.
Specialists employed by you engage in private practice under a private practice agreement.
For the purposes of the agreement, private practice is described in clause 2 of the Private Practice Agreement.
The Private Practice Agreement describes the agency relationship between you and the specialists.
There is no flexibility agreement in place which would alter the ordinary hours of work for specialists.
Relevant legislative provisions
Superannuation Guarantee (Administration) Act 1992 (SGAA) subsection 6(1)
ATO View documents
Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages'
Reasons for decision
OTE is usually the amount an employee earns for their ordinary hours of work. It includes commissions, shift-loadings and some allowances, but does not include overtime payments.
The Commissioner's views on OTE are included in Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages'. (SGR 2009/2). Paragraph 12 of SGR 2009/2 provides the meaning of 'earnings', and paragraphs 13 to 18 of SGR 2009/2 outline the meaning of 'ordinary hours of work'.
Application of the law to your circumstances
Question 1
In your case, specialists are engaged under the Enterprise Agreement and where they engage in private practice, under a Private Practice Agreement.
The Private Practice Agreement explains that you act as an agent for the specialists. You render all accounts on behalf of the specialists and collect all debts on behalf of the specialists. At no point does the specialist cease to be employed by you and the Enterprise Agreement applies during hours worked in private practice.
The Enterprise Agreement provides that a full time specialist's ordinary hours are a maximum of 38 hours, which is averaged over a set period of 35 hours for fractional specialists.
As per paragraph 13 of SGR 2009/2, where an agreement clearly specifies what ordinary hours are, these hours are OTE. Therefore where a specialist provides private practice services within their respective established ordinary hours, as defined in the enterprise agreement, earnings from these hours are OTE.
Question 2
In your case, the Enterprise Agreement draws a genuine distinction between ordinary hours and overtime in clause 42.2 by, amongst other conditions, offering overtime rates for hours worked above ordinary hours. Therefore, as supported by paragraphs 14 and 15 of SGR 2009/2, these extra hours are overtime and earnings from these hours are not OTE.