Superannuation Guarantee: New definition of Ordinary Time Earnings

Since 1 July 2008, employers have been required to use ‘ordinary time earnings’ (OTE) to calculate their employees’ minimum superannuation guarantee (SG) contributions.

The new Superannuation Guarantee Ruling SGR 2009/2 explains what OTE means for the purposes of the Superannuation Guarantee (Administration) Act 1992 and is applicable to payments made to employees in the quarter beginning 1 July 2009.

OTE is the total of earning in respect to ordinary hours worked by an employee excluding payments in lieu of unused sick leave, annual or long service leave. The new ruling states that payments in lieu of notice and Christmas bonuses will be included in calculating OTE however there is no clarification as to whether parental leave and jury duty payments are to be included in calculating OTE.

According to the ruling, there are circumstances where overtime may be included in the calculation of OTE depending on the treatment of payments under awards and agreements. Although simple overtime payments for full time or casual employees are not part of OTE, when there are no ordinary hours of work stipulated overtime payments are included in OTE.

Published : 9 June 2009