Below is a table detailing the differences between “salary” and “ordinary time earnings (OTE)”. It is important as the definition also affects the superannuation payable for an employee. Therefore the superannuation calculated is:
OTE times Superannuation Rate
OTE ($3000) x Rate (9%) = $270 (Superannuation Payable)
Employers must use ordinary time earnings (OTE) to work out the minimum superannuation contribution for their employees. If this base is different from the one in use, and the superannuation calculated is lower than the minimum threshold, the employer could be liable for the SGC (Superannuation Guarantee Charge) and also possible audit from the ATO.
Payments to an employee in relation to: | Salary or wages? | Ordinary time earnings? |
---|---|---|
Awards and agreements: | ||
Overtime hours – award stipulates ordinary hours to be worked and employee works additional hours for which they are paid overtime rates | Yes | No |
Overtime hours – agreement prevailing over award | Yes | No |
Agreement supplanting award removes distinction between ordinary hours and other hours | Yes – all hours worked | Yes – all hours worked |
No ordinary hours of work stipulated | Yes – all hours worked | Yes – all hours worked |
Casual employee: | ||
shift-loadings | Yes | Yes |
overtime payments | Yes | No |
Casual employee whose hours are paid at overtime rates due to a ‘bandwidth’ clause | Yes | No |
Piece-rates – no ordinary hours of work stipulated | Yes | Yes |
Overtime component of earnings based on ‘hourly driving rate’ formula stipulated in award | Yes | No |
Allowances: | ||
Allowance by way of unconditional extra payment | Yes | Yes |
Expense allowance expected to be fully expended | No | No |
Danger allowance | Yes | Yes |
Retention allowance | Yes | Yes |
Hourly on-call allowance in relation to ordinary hours of work for doctors | Yes | Yes |
Payment of expenses | ||
Reimbursement | No | No |
Petty cash | No | No |
Reimbursement of travel costs | No | No |
Payments for unfair dismissal | No | No |
Workers’ compensation: | ||
returned to work | Yes | Yes |
not working | No | No |
Leave payments: | ||
Annual leave | Yes | Yes |
Parental leave – eg maternity leave, paternity leave, adoption leave | No | No. |
Ancillary leave – eg jury duty, defence reserve service | No | No. |
Termination payments: | ||
in lieu of notice | Yes | Yes |
unused annual leave | Yes | No |
Bonuses: | ||
Performance bonus | Yes | Yes |
Bonus labelled as ex-gratia but in respect of ordinary hours of work | Yes | Yes |
Christmas bonus | Yes | Yes |
Bonus in respect of overtime only | Yes | No |