Do you get paid Super on your overtime?

2019-07-13
A good question makes you stop and think, and when it comes to your Super, some things you just need to know. A good question makes you stop and think, and when it comes to your Super, some things you just need to know.

Do you get paid Super on your overtime?

Well, the answer is usually no, but also that depends.

Your superannuation is your forced savings for your retirement, so it’s important to understand these two key features:

  • How much Super are you being paid?
  • How is it actually calculated when it comes to commissions, bonuses, overtime and back pay?

Jump Ahead

When are you entitled to be paid Super?

  • When you're paid over $449 per month - you're entitled to Super (also referred to as SG).
  • When you're paid less than $449 before tax in a calendar month - you're not entitled to Super.
  • When you're under 18 years of age and do not work more than 30 hours in a week - you're not entitled to Super.

How much Super should you expect to be paid?

  • The current Super Guarantee rate (or SG for short) is 9.5% of your ordinary time earnings
  • This 9.5% is paid is on top of your wages. 
    • So, if your ordinary time earnings are $50,000 then you will expect to be paid an additional $4,750 into super.
  • Contractors are considered employees for the purpose of the super responsibilities of employers too. (See the video below).

Employers are legally obligated to keep records for 5 years about how much super they pay you and how they worked this amount out.

Special Note about Employment Awards: Some awards have additional super requirements so if you're employed under an award, check the award for those additional details.

Does everyone have to pay Super contributions from their income?

  • In Australia, workers have to be paid Super if they’re a paid employee receiving over $449 per month (before tax), but this does not apply to any hours worked on overtime.
  • The current minimum is calculated on 9.5% of your Ordinary Time Earnings up to a certain limit.
  • Overtime is usually not included in your SG calculation

The SG rate will increase to 12% by 1 July 2025.

What's my Ordinary Time Earnings?

An employee's Ordinary Time Earnings (OTE) is generally what they earn for their ordinary hours of work.

The intention behind OTE is all employees are treated equally when an employer makes a contribution under the superannuation guarantee rules.

The ATO states employers must 'use OTE to calculate the minimum super guarantee contributions for eligible employees.'

Typical payments included in Ordinary Time Earnings

The following payments are counted towards a workers OTE:

  • over-award payments
  • commissions
  • shift loading
  • annual leave loading
  • allowances
  • bonuses

Typical payments not included in Ordinary Time Earnings

The following payments are not counted towards a workers OTE:

  • Overtime hours, including for casual employees
  • Expense payments - reimbursed expenses etc.
  • Parental leave
  • Ancillary leave (jury duty etc.)
  • Unused annual leave payments on termination of employment
  • Bonus paid in respect of overtime worked

Payments for work performed outside an employee's ordinary hours of work are not considered OTE, even if the payments are calculated at an hourly rate.

Note about Casual staff and Overtime: If you can't distinctly identify overtime amounts, (perhaps staff are comprised of casual labour etc.), the hours actually worked will usually be included in ordinary hours of work.

Special Note about Employment Awards: Some awards have additional super requirements so if you're employed under an award, check the award for those additional details.

Click here to Estimate Your Super Payments

Is there a maximum SG Contribution cap?

The Maximum SG an employer is required to pay an employee is capped at the Maximum Contribution Base.

  • If you earn above that limit during a quarter, your employer does not have to make contributions for the part of your earnings over the limit.

The maximum SG contribution base income for 2019/20 is $55,270 per quarter, which equals a maximum SG contribution of $5,293.40 per quarter.

Do Contractors get super?

Contractors paid mainly for their labour are considered employees for Superannuation Guarantee purposes and entitled to super contributions under the same rules as employees.

  • This means 9.5% of the cost of their labour needs to be calculated for Super contributions purposes.
  • If you're a contractor paid wholly or principally for your labour, you're considered an employee for super purposes and entitled to super guarantee contributions under the same rules as employees.

This is the case even if the contractor quotes an Australian Business Number (ABN).

Pro Tip: For Super Guarantee Contributions to apply, the contract must be directly between you and your employer. It can’t be through another person or through a company, trust or partnership. Speak with your Accountant for more guidance on this issue.

Difference between Contractor and Employee

Remember your Super is your money so it pays to know how much you should get paid and how that calculation is actually made.

Your future comfortable retirement depends upon it.

Contact us today here to see if we're the type of people you'd like to work with.
 
Drew Browne

Drew specialises in helping people protect and provide for what matters most in their lives. He's an award-winning writer, speaker, financial adviser and business strategy mentor. His company Sapience Financial and Investment Services is committed to using business solutions for good in the community, and in 2015 certified as a B Corp. In 2017 Drew was recognised in the inaugural Australian Westpac Businesses of Tomorrow national awards. Drew writes for successful Small Business Owners and Entrepreneurs at Smallville, his blogs can be read on Amazon.com and you can connect with him on LinkedIn.

drew browne pic

Drew Browne

Sapience Founder & Director.
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