Private ruling: Superannuation guarantee
Date of advice: 21 September 2015
Published: September 2015

Ruling: Q3: Will the relevant public holiday equitable payments made by the Employer to the Employees constitute OTE of the Employees for the purposes of subsection 6(1) of the SGAA? Advice No. Refer to 'Reasons for decision'

Relevant facts and circumstances: This advice is based on the facts stated in the description of the scheme that is set out below. If your circumstances are significantly different from these facts, this advice has no effect and you cannot rely on it. 1. The 'Employees are engaged under two Enterprise Agreements (Agreement 1 and Agreement 2). 2. Relevantly, Agreement 1 provides that: • The superannuation rights and obligations of the parties are governed by superannuation legislation including the Superannuation Guarantee (Administration) Act 1992. • The hours for an ordinary week's work for full-time Employees, excluding meal times is 38 hours per week. • The ordinary hours of work for full-time and part-time Employees shall be worked according to a roster. • An Employee may be on-call to be recalled to duty in a specified period beyond the Employee's rostered hours of duty. • Where an Employee is recalled to duty beyond the Employee's rostered hours of duty they receive a minimum payment of three hours at the appropriate overtime rate. • A full-time employee shall receive one and a half days ordinary pay for a prescribed public holiday (the Public Holiday) which falls on their rostered day off. Furthermore, Monday to Friday employees shall receive one day's pay for Easter Saturday. • A part-time Employee who is not rostered to work on the day of the week on which a particular holiday is observed shall be entitled to the public holiday only if required to work on the Public Holiday or has worked a minimum of 50% of the relevant day of the week over the previous 6 months. 3. Similarly, Agreement 2 provides that: • The hours for an ordinary week's work for full-time Employees will be an average of 38 hours per week with the exception of Employees specifically identified in that clause. • The ordinary hours of duty of full-time and part-time Employees shall be worked according to rosters. • An Employee rostered to be 'on call' shall be paid an allowance. • 'On call' means to be available to be recalled to duty in that period beyond the Employee's rostered hours of duty. An employee rostered on call and recalled to duty shall be paid a minimum of three hours pay. • An employee shall receive one day's ordinary pay for public holidays that occur on their rostered day off. • Where a public holiday occurs on a day an Employee is not rostered to work, and that Employee is recalled to duty, overtime rates apply to the recall. 4. The 'on-call'/'re-call payments' are not an added loading/allowance paid to the Employees on salary or wages of the Employees. 5. Public holiday equitable payments are made in respect of a prescribed public holiday which falls on an Employee's rostered day off to compensate the Employees for missing out on public holiday shift-loading/penalty payment otherwise payable to Employees who work their ordinary hours on a public holiday.

Relevant legislative provisions: Superannuation Guarantee (Administration) Act 1992 Subsection 6(1).

Reasons for decision: Summary: The 'on-call' allowance, re-call payments and the public holiday equitable payments paid to the Employees of the Employer in accordance with Agreement 1 and Agreement 2 do not form part of the employee's OTE for the purposes of subsection 6(1) of the SGAA. | Detailed Reasoning - Ordinary time earnings: OTE, in relation to an employee, is defined in subsection 6(1) of the SGAA and is the lesser of: • the total of the employee's earnings in respect of ordinary hours of work and earnings consisting of over award payments, shift loading or commission (but does not include lump sum payments made on termination of employment in lieu of unused sick leave, unused annual leave and unused long service leave); or • the maximum contribution base for the quarter. The Commissioner explains the meaning of OTE as defined in subsection 6(1) of the SGAA in Superannuation Guarantee Ruling SGR 2009/2 Superannuation Guarantee: Meaning of the terms 'ordinary time earnings' and 'salary or wages' (SGR 2009/2). Relevantly, at paragraphs 13 to 15 of SGR 2009/2, the Commissioner states: 13. An employee's 'ordinary hours of work' are the hours specified as his or her ordinary hours of work under the relevant award or agreement, or under the combination of such documents, that governs the employee's conditions of employment. 14. The document need not use the exact expression 'ordinary hours of work', but it needs to draw a genuine distinction, for the purposes of the award or agreement, between ordinary hours and other hours. In particular, it would be expected that the other hours are remunerated at a higher rate (typically described as overtime) than the ordinary hours, or otherwise identifiable as a separate component of the total pay in respect of non-ordinary hours 15. Any hours worked in excess of, or outside the span (if any) of, those specified ordinary hours of work are not part of the employee's 'ordinary hours of work'. In accordance with paragraph 18 of SGR 2009/2, 'ordinary hours of work' are not necessarily limited to hours to be worked between 9am and 5pm, Monday to Friday. They may (depending on the provision in the relevant award or agreement, if any) include hours to be worked at other times, including at night, on weekends or on public holidays. | Detailed Reasoning - On-call allowances: On-call allowances are specifically discussed by the Commissioner in paragraphs 44 and 45 of SGR 2009/2 which state: 44. An on-call or availability allowance is a payment to an employee for making himself or herself available at certain times to be called in to work if needed. This entitlement is separate from the salary or wages he or she will receive if actually called in. If paid in respect of hours that the employee is not otherwise working, these payments are not OTE. 45. In some cases on-call allowances are paid as a loading on the salary of an employee received for ordinary hours of work. For example, some doctors employed by hospitals are paid an extra hourly allowance, while carrying out routine duties in ordinary hours of work, to make themselves available to perform urgent surgery if required. Payments of that kind are OTE (except of course to the extent that they are paid in respect of overtime hours). | Detailed Reasoning - Application of the above stated principles to the relevant 'on-call'/'re-call' payments: In accordance with Agreement 1 and Agreement 2, the Employees are on call when they make themselves available to be recalled to duty in a specified period which is outside of their ordinary hours of work. The allowance paid to an 'on-call' Employee is not paid as a loading on the salary of the Employee and is a separate payment from the payment they receive if they are actually recalled to duty. Therefore, in this case, the 'on-call' allowance paid to the Employees does not constitute OTE of the Employees. Agreement 1 and Agreement 2 provide that if the Employees are actually recalled to duty during such an 'on-call' period, the hours worked constitute overtime of the Employees and are paid at the appropriate overtime rate. As 're-call' payments relate to hours that are outside of the Employees' ordinary hours of work and are paid at overtime rates, re-call payments do not form part of OTE of the Employees for the purposes of subsection 6(1) of the SGAA. | Detailed Reasoning - Public holiday equitable payments: Paragraph 25 of SGR 2009/2 provides that all earnings in respect of employment are in respect of an employee's ordinary hours of work unless they are remuneration for overtime hours or other hours that are not ordinary hours of work. The Commissioner does not consider that the services or attendance of an employee specifically during certain hours of work is necessary for the earnings to be 'in respect of ordinary hours' and therefore OTE. The Commissioner's view is that the expression 'in respect of ordinary hours of work' was intended to ensure that overtime payments, and similar amounts, were excluded from the earnings base. It was not intended to exclude amounts paid at a worker's ordinary time rate solely on the ground that they were not earned as a direct result of actually working particular hours in ordinary time (paragraph 226 of SGR 2009/2). Paragraph 227 of SGR 2009/2 addresses the issue of earnings in respect of public holidays and states: ….. during public holidays an employee does not provide services or attend work, and the entitlement to the payment for the holiday has not accrued during ordinary hours actually worked. However, the payment the employee receives is 'in respect of ordinary hours of work' because it is salary or wages received at their ordinary rate of pay paid for a period which would normally be their ordinary working hours. In this case, a public holiday equivalent payment is received by the Employees in respect of a prescribed public holiday which falls on their rostered day off, that is, it is paid for a period which would not normally be their ordinary working hours. That being the case, this payment would not form part of the Employees' OTE for the purposes of subsection 6(1) of the SGAA.

Question 1: Will relevant 'on-call' payments made by the Employer to applicable employees (the Employees) constitute OTE of the Employees as defined in subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)? | Question 2: Will relevant 're-call' payments made by the Employer to the Employees constitute OTE of the Employees as defined in subsection 6(1) of the SGAA? | This advice applies for the following period: Income year ending 30 June 2016