Change to super guarantee calculation

All employers should be aware that as from 1 July 2008 ordinary time earnings (OTE), as defined in the super guarantee law, must be used to calculate super contributions for their employees.

OTE is generally what an employee earns for ordinary hours of work including over-award payments, shift loading or commissions. It excludes such things as overtime (and there are some other exceptions).

Most employees have OTE as their earnings base, however some have other earnings bases that may be contained in:

	an industrial award
	an existing employment agreement
	a fund's trust deed or
	a Commonwealth, State or Territory law.

If an employer is currently paying super on a different earnings base, and this results in an amount being paid which is less than the minimum 9% of OTE from 1 July 2008, they may need to increase the super support to meet the minimum and avoid the superannuation guarantee charge (SGC).

Example

A company that pays sales employees commission has been paying super contributions under an award for its employees which states that commission is excluded from ordinary time earnings. From 1 July 2008, the company must include commissions for its sales employees when calculating super guarantee contributions.

Published : 2 May 2008