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Edited version of your written advice
Authorisation Number: 1012844561288
Date of advice: 27 July 2015
Advice
Subject: Ordinary time earnings
Question
Are earnings worked as a part of a broken shift, as defined in your enterprise agreement (the EBA), OTE for the purposes of subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?
Advice
Yes, please see the 'Reasons for decision'.
This advice applies for the following periods:
Year ending 30 June 2016
Year ending 30 June 2017
Year ending 30 June 2018
Year ending 30 June 2019
The arrangement commences on:
• 1 July 2015
Relevant facts and circumstances
• You applied for administratively binding advice asking on your responsibility to superannuation guarantee for payments made in regards to certain broken shifts undertaken by your employees.
• Your employees are engaged under a bargaining enterprise agreement (EBA).
• The EBA contains the following relevant details:
• Overtime is paid where an employee works in excess of 8 hours in any one day.
• The EBA provides definitions of different shifts.
• Where a broken shift is worked (less than five consecutive shifts Monday to Friday) the rates payable shall be time and a half for the first two hours and then double time thereafter.
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'.
Paragraph 20 of SGR 2009/2 explains that a shift loading is specifically included in the definition of OTE. However, paragraph 22 of the ruling explains that shift loadings need to be distinguished from a loading paid during overtime hours, as these are not considered OTE.
Application of the law to your circumstances
In your case shift loadings, including loadings for a broken shift, are described in the EBA.
Overtime is defined in the EBA as any work in excess of eight hours on any day, Monday to Friday. Therefore where a broken shift is worked where the employee does not work in excess of 8 hours for the day, the loading for a broken shift will apply. As per paragraph 22 of SGR 2009/2, there is a clear distinction between the shift loading and overtime as defined in the EBA. Shift loadings are specifically included in the definition of OTE, except where it relates to overtime hours. Therefore, where a broken shift is performed within the ordinary hours of work for the employee, earnings from this shift will be OTE for superannuation guarantee purposes.
This advice does not change where the number of broken shifts changes. A single broken shift worked throughout the week would still meet the definition of a broken shift in the EBA and therefore payments in relation to the shift would be OTE for superannuation guarantee purposes.