Private ruling: Superannuation guarantee - ordinary hours of work
Date of advice: 27 June 2022
Published: October 2022

Ruling: Q1: Is superannuation payable by reference to ordinary hours of work or all hours worked? | A1: An employee's ordinary hours of work are to be used for the purposes of calculating their minimum level of superannuation support. The arrangement commences on 1 July 20XX

Relevant facts and circumstances: The relevant employees are covered by the Award. Clause 9 of the Award specifies that the ordinary hours of work for a full-time employee are an average of 38 hours per week. Clause 10.1 of the Award specifies that the ordinary hours of work for a part-time employee are a constant number of hours of less than 38 hours per week. Clause 11.1 of the Award specifies that the ordinary hours of work for a casual employee are the lesser of an average of 38 hours per week or the hours required to be worked by the employer. The stipulated working arrangements for the relevant employees are a '8 days on, 6 days off' roster in which they work an average of 96 hours across a 14 day period (or an average of 48 hours per week), which consists of 38 hours ordinary time and 10 hours overtime. Clause 20 of the Award stipulates the rate of pay for hours completed outside ordinary hours of work for a casual, part-time and full-time employee. The relevant employees are covered by employment contracts and individual flexibility agreements.



Relevant legislative provision: Subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 | Summary: An employee's ordinary hours of work are to be used for the purposes of calculating their minimum level of superannuation support. The Award specifies the ordinary hours of work for the relevant employees. | Detailed reasoning: Ordinary time earnings (OTE) is the earnings base used to calculate the minimum superannuation contribution for an eligible employee. | Subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 ('SGAA') defines OTE as: | (i) earnings in respect of ordinary hours of work other than earnings consisting of a lump sum payment of any of the following kinds made to the employee on the termination of his or her employment: | (A) a payment in lieu of unused sick leave; | (B) an unused annual leave payment, or unused long service leave payment, within the meaning of the Income Tax Assessment Act 1997 ; and | (ii) earnings consisting of over-award payments, shift-loading or commission; or | (b) if the total ascertained in accordance with paragraph (a) would be greater than the maximum contribution base for the quarter - the maximum contribution base. | Therefore, an employee's ordinary hours of work are used to calculate their ordinary time earnings. | The Commissioner's views on the meaning of ordinary time hours and OTE are contained in the Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages' (SGR 2009/2). | Paragraphs 13 to 18 of SGR 2009/2 provides the meaning of ordinary hours of work. The relevant paragraphs are found below. | 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'. | Application to your circumstances: As the relevant clauses in the Award specifying the ordinary hours of work cannot be varied, the Award defines the ordinary hours of work for the relevant employees. | The ordinary hours of work for a full-time employee are an average of 38 hours per week in accordance with clause 9 of the Award. | The ordinary hours of work for a part-time employee are a constant number of hours of less than 38 hours per week in accordance with clause 10.1 of the Award. | The ordinary hours of work for a casual employee are the lesser of an average of 38 hours per week or the hours required to be worked by the employer in accordance with clause 11.1 of the Award. | The earnings in respect of ordinary hours of work are to be used to calculate the minimum level of superannuation support for the relevant employees under the SGAA. | We consider that the employer is meeting their obligation under the SGAA in this instance.