Private ruling: superannuation guarantee obligations
Published: September 2013

Ruling: Q1: Do earnings from public holidays worked, which fall within the regular rostered hours of full-time and part-time employees who are engaged under an Award or Agreement form part of the employee's ordinary time earnings (OTE) for the purposes of subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)? Advice Yes. The earnings from public holidays worked, which fall within the regular rostered hours of full time and part time employees forms part of the employees OTE for the purposes of subsection 6(1) of the SGAA.

Relevant facts and circumstances: The employer currently employs workers in various states of Australia. The employer wrote to the Commissioner requesting advice regarding their superannuation guarantee obligations in respect of workers who work on public holidays. In their letter the employer provided the following information: ¢ Employees are rostered to work regular hours (for example Monday to Friday) as part of their normal shift. ¢ When a public holiday falls within the employee's rostered hours, the employees may choose whether or not to work on the public holiday. ¢ The employees who choose to work on a public holiday that falls within their regular rostered hours receive 7.6 hours at their ordinary rate of pay and an additional payment of 150% of the ordinary rate of pay. ¢ The employee's who do not choose to work on a public holiday that falls within their regular rostered hours receive 7.6 hours at their ordinary rate of pay on which superannuation guarantee is paid on 7.6 hours at their ordinary rate of pay. ¢ Where an employee chooses not to work on a public holiday that falls within their regular rostered hours a replacement worker will cover the shift. The replacement worker, such as a part time worker who is not rostered to work under their regular rostered hours, will be paid their ordinary rate of pay plus an additional payment of 150% of the ordinary pay rate. As this work does not fall within their regular rostered hours, no superannuation guarantee liability exists. ¢ Copies of the Award and Agreement were provided. ¢ The Award provides the following information: The span of ordinary hours is any day of the week (Monday to Sunday) and at any time. Employees shall be engaged as full time, part time or casual employees. Full time employees may work for not more than 38 hours in a week in periods of not more than 7.6 hours a day over 5 days in a week; or an average of 38 hours per week in no more than 152 hours over a four week cycle. Part time and casual employees work less than 38 hours a week, not more than 7.6 hours a day and for no more than 5 days in a week. Casual employees perform work on an intermittent or irregular basis. Where public holidays are worked the employee shall be paid at double time and a half of their normal rate. ¢ The Agreement provides the following information: Employees under the Agreement will be employed as either permanent or casual employees. Permanent employees will be either full-time or part-time. A casual employee is an employee who is paid by the hour and where the work is of an intermittent or ad-hoc nature. For permanent full time employees the ordinary working hours shall be an average of 38 hours per week to be worked either as 38 hours per 7 day cycle or 76 hours per 14 day cycle Each permanent full time employee shall be entitled to two consecutive full days off within a seven day cycle. A maximum of ten ordinary hours work per day may be worked (to be exclusive of meal breaks) on any of the five rostered days of the week. A part time employee is an employee who works less than 38 hours per week and is engaged for a regular number of hours each week; and For all hours worked on public holidays an employee shall be paid at double time and one half of the ordinary hourly rate for their appropriate classification.

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

Reasons for decision: Summary: Do earnings from public holidays worked by casual employees who are engaged under an Award or Agreement form part of the employee's OTE for the purposes of subsection 6(1) of the SGAA? | Detailed Reasoning - Advice: Yes. The earnings from public holidays worked by casual employees forms part of the employee's OTE for the purpose of subsection 6(1) of the SGAA. | Detailed Reasoning - Relevant facts and circumstances: The employer currently employs workers in various states of Australia. The employer wrote to the Commissioner requesting advice regarding their superannuation guarantee obligations in respect of workers who work on public holidays. In their letter the employer provided the following information: ¢ Employees are rostered to work regular hours (for example Monday to Friday) as part of their normal shift. ¢ When a public holiday falls within the employee's rostered hours, the employees may choose whether or not to work on the public holiday. ¢ The employees who choose to work on a public holiday that falls within their regular rostered hours receive 7.6 hours at their ordinary rate of pay and an additional payment of 150% of the ordinary rate of pay. ¢ The employee's who do not choose to work on a public holiday that falls within their regular rostered hours receive 7.6 hours at their ordinary rate of pay on which superannuation guarantee is paid on 7.6 hours at their ordinary rate of pay. ¢ Where an employee chooses not to work on a public holiday that falls within their regular rostered hours a replacement worker will cover the shift. The replacement worker, such as a part time worker who is not rostered to work under their regular rostered hours, will be paid their ordinary rate of pay plus an additional payment of 150% of the ordinary pay rate. As this work does not fall within their regular rostered hours, no superannuation guarantee liability exists. ¢ Copies of the Award and Agreement were provided. ¢ The Award provides the following information: The span of ordinary hours is any day of the week (Monday to Sunday) and at any time. Employees shall be engaged as full time, part time or casual employees. Full time employees may work for not more than 38 hours in a week in periods of not more than 7.6 hours a day over 5 days in a week; or an average of 38 hours per week in no more than 152 hours over a four week cycle. Part time and casual employees work less than 38 hours a week, not more than 7.6 hours a day and for no more than 5 days in a week. Casual employees perform work on an intermittent or irregular basis. Where public holidays are worked the employee shall be paid at double time and a half of their normal rate. ¢ The Agreement provides the following information: Employees under the Agreement will be employed as either permanent or casual employees. Permanent employees will be either full-time or part-time. A casual employee is an employee who is paid by the hour and where the work is of an intermittent or ad-hoc nature. For permanent full time employees the ordinary working hours shall be an average of 38 hours per week to be worked either as 38 hours per 7 day cycle or 76 hours per 14 day cycle Each permanent full time employee shall be entitled to two consecutive full days off within a seven day cycle. A maximum of ten ordinary hours work per day may be worked (to be exclusive of meal breaks) on any of the five rostered days of the week. A part time employee is an employee who works less than 38 hours per week and is engaged for a regular number of hours each week; and For all hours worked on public holidays an employee shall be paid at double time and one half of the ordinary hourly rate for their appropriate classification. | Detailed Reasoning - Relevant legislative provisions: Superannuation Guarantee (Administration) Act 1992 Subsection 6(1). | Summary: In respect of full-time and part-time employees earnings from public holidays worked, which fall within the regular rostered hours of employees who are engaged under the Award or the Agreement, do form part of the employee's OTE for the purposes of subsection 6(1) of the SGAA. Earnings from public holidays worked by casual employees who are engaged under the Award or the Agreement also form part of the employee's OTE for the purposes of subsection 6(1) of the SGAA. | Detailed Reasoning - Detailed reasoning: The SGAA places a requirement on all employers to provide a minimum level of superannuation support for their eligible employees by the quarterly due date, or pay the superannuation guarantee charge percentage (currently 9% and increasing to 9.25% for the period 1 July 2013 to 30 June 2014). From 1 July 2008, employers must use OTE as defined in subsection 6(1) of the SGAA as the earnings base to calculate the minimum superannuation guarantee contributions for their employees. This ensures that all employees are treated the same for superannuation purposes. | 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: (a) 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 (b) the maximum contribution base for the quarter - the maximum contribution base, which is the maximum limit on the amount of superannuation support that an employer is expected to provide for the benefit of an employee. The maximum contribution base for the 2011/12 year of income is $43,820 per quarter. This amount is indexed annually according to the indexation factor. The Commissioner's views on OTE generally, including an employee's ordinary hours of work, are included in Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages '. Paragraphs 13 to 15 and 18 of SGR 2009/2 address the meaning of 'ordinary hours of work' and state: 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 employees 'ordinary hours of work'. 18. '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. Paragraph 20 of SGR 2009/2 relates to payments specifically included in the definition of 'ordinary time earnings' in subsection 6(1) and states: 20. Earnings consisting of over-award payments, shift-loadings or commission are specifically included in the definition of OTE by subparagraph (a)(ii) in subsection 6(1). Paragraphs 220 to 222 of SGR 2009/2 relate specifically to shift loadings and state: 220. The Macquarie Dictionary defines 'shift loading' as: An allowance paid to employees on shiftwork as compensation for their having to work outside the usual span of hours fixed for day workers. 221. A payment in addition to the ordinary rate of pay made to a shift worker by reason of compensation of working outside the span of hours which is designated for day workers, for example, early morning, late at night, weekends or public holidays, is a shift loading. Such payments are therefore included in the definition of OTE in subsection 6(1). 222. Shift-loadings payable on ordinary hours of work must be distinguished from overtime payments under awards and agreements. Often these are mutually exclusive under awards and agreements, but if an employee is entitled to a shift-loading in respect of hours other than ordinary hours of work, the Commissioner's view is that the specific inclusion of shift-loading does not apply in that circumstance. Paragraph 25 and paragraph's 225 to 228 of SGR 2009/2 provides that earnings 'in respect of ordinary hours of work' means all hours other than overtime. Paragraph 25 of SGR 2009/2 states: 25. All amounts of earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remuneration for working overtime hours, or are otherwise referrable only to overtime or to other hours that are not ordinary hours of work. There is no such thing as earnings that are merely in respect of employment generally and are not OTE because they are not in respect of any particular hours of work. Paragraphs 225 to 228 of SGR 2009/2 state: 225. All amounts of earnings in respect of employment are in respect of the employee's ordinary hours of work unless they are remuneration for working overtime hours, or are otherwise referable only to overtime or to other hours that are not ordinary hours of work. 226. 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 of work' was intended to ensure that overtime payments, and cognate amounts, were excluded from the earnings base. It was not intended to exclude amounts paid at a worker' ordinary time rate solely on the grounds that they were not earned as a direct result of actually working particular hours in ordinary time. 227. For example, 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 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. 228. Given this view, the Commissioner considers that there is no such thing as earnings that are merely in respect of employment generally and are not OTE because they are not in respect of any particular hours of work. However payments that are not considered 'salary or wages' for the purposes of the SGAA cannot be OTE. | Detailed Reasoning - Application of the law to the circumstances: In this case, the terms and conditions of employment for the employees are set out in the Award or the Agreement. The Award and the Agreement both provide that employees may be engaged on a full-time, part-time or casual basis. Which instrument will apply depends on the location of the employees work, for example, if they are working in a capital city. Paragraph 20 of SGR 2009/2 provides that earnings consisting of shift-loadings are specifically included in OTE. Both the Award and the Agreement include clauses in respect of public holidays which provide that all hours worked on public holidays will be paid at double time and one half of the ordinary hourly rate (the ordinary rate plus an additional rate of150% of the ordinary rate). It is the Commissioner's view that the rate of double time and a half is paid to the employees as compensation for working outside their designated working hours. Paragraph 221 of SGR 2009/2 provides that payments in addition to the ordinary rate of pay made to workers by reason of compensation for working hours outside their designated working hours, such as public holidays is a shift-loading and is specifically included in the employee's OTE. | Detailed Reasoning - Question 1: Full-time employees engaged under the Award Under the Award, full-time employees who attend work on a public holiday, which forms part of their ordinary rostered hours, are paid at a rate of double time and a half. As stated above, it is the Commissioner's view that this rate is paid as compensation for working outside their designated working hours is therefore included in the employees OTE for the purposes of subsection 6(1) of the SGAA. Part time employees engaged under the Award Under the Award, part-time employees who attend work on a public holiday, which forms part of the ordinary rostered hours, are paid at a rate of double time and a half. As stated above, it is the Commissioner's view that this rate is paid as compensation for working outside their designated working hours and therefore is included in the employees OTE for the purposes of subsection 6(1) of the SGAA. Full-time and part-time employees engaged under the Agreement Under the Agreement, full-time and part-time employees who attend work on a public holiday, which forms part of their ordinary rostered hours, are paid at a rate of double time and a half. As this rate is paid as compensation for working outside their designated working hours, the earnings are included in the employee's OTE for the purposes of subsection 6(1) of the SGAA. Under the Agreement, the ordinary hours of work are a maximum of 10 hours per day. Therefore, the employees OTE for work completed on a public holiday would be the earnings in respect of up to 10 hours paid at a rate of double time and one half for the purposes of subsection 6(1) of the SGAA. | Detailed Reasoning - Question 2: Casual employees engaged under the Award Under the Award, employees who work on a public holiday are paid at the rate of double time and one half of the ordinary hourly rate. A clause of the award provides that the ordinary hours of work of casual employees will be worked in periods of not more than 7.6 hours per day. Therefore, casual employee's OTE for work completed on a public holiday would be the earnings in respect of up to 7.6 hours paid at a rate of double time and a half for the purposes of subsection 6(1) of the SGAA. Earnings in respect of hours worked on a public holiday which is in excess of 7.6 hours would be considered to be in respect of overtime hours and therefore is not included in the employees OTE the purposes of subsection 6(1) of the SGAA. Casual employees engaged under the Agreement The Agreement does not specify the maximum hours to be worked by casual employees. Paragraph 17 of SGR 2009/2 provides that in cases where it is not possible to determine the normal, regular, usual or customary hours of an employee, the actual hours work should be taken to be the ordinary hours of work. This is highlighted in SGR 2009/2 at Example 4 - No ordinary hours of work stipulated which is provided in paragraphs 99 to 102 of the ruling. Paragraphs 99 to 102 of SGR 2009/2 state: 99. Kim is employed under a contract requiring her to work a minimum number of hours per week in a call centre. By agreement between her and the employer, she may work additional shifts as is mutually convenient. She often does so, though there is no clear and consistent pattern to this. 100. There is no award or agreement governing Kim's employment that specifies ordinary hours of work, nor do the extra shifts worked attract any overtime penalties or other higher payments. Salary or wages 101. All wage payments made to Kim Boro reward to services she provides as an employee and are therefore 'salary or wages'. 0TE 102. As there are no stipulated ordinary hours of work, and no readily discernible pattern of customary, regular, normal or usual hours, all of Kim's hours actually worked up ordinary hours of work. Therefore all of her wages are OTE. As the Agreement does not specify a maximum number of hours to be worked per day, all hours worked by casual employees who work under the Agreement form part of their ordinary hours of work and therefore all earnings in respect of these hours form part of the employee's OTE for the purposes of subsection 6(1) of the SGAA.