Private ruling: Ordinary times earnings
Date of advice: 29 April 2026
Published: 13 July 2026
Date scheme commenced: 1 July 20XX

Ruling: Q1: Do Settlement payments for unrostered, unpaid overtime worked by a category of employees as per the relevant Enterprise Agreements form part of their ordinary times earnings (OTE) pursuant to subsection 6(1) of the Superannuation Guarantee (Administration) Act 1992 (SGAA)? | A1: No.

Relevant facts and circumstances: 1. On XX XXX 20XX representative proceedings were issued on behalf of a category of employees against their employer for the nonpayment of overtime they were required to work. The overtime was unrostered, approved to be worked but unpaid. The statement of claim asserted that the non-payment of the unrostered approved overtime was contrary to the various enterprise agreements in effect. 2. Overtime that remained unpaid and referred to in the proceedings was authorised to be worked by the relevant health services. 3. A class action was implemented on behalf of affected employees during periods of employment with various health service providers. 4. A Deed of Settlement (the Deed) determined the amounts awarded to the claimants and the eligibility criteria to be included for any distribution of settlement funds. 5. The settlement's terms, funds and distribution include: • A Settlement sum to be paid to eligible claimants in accordance with the scheme • A Legal costs sums for legal costs and disbursement. • A Claims Assessment and administration sum for the implementation and operation of the settlement scheme process, including distribution of amounts to individual claimants. 6. An eligible claimant is defined as an individual in respect of whom the Scheme Administrator is satisfied has met the criteria set out in the Eligibility Criteria. 7. Eligible duties are defined as the duties set out in the Deed, which lists the rounds of duties that qualify for the purposes of the Deed. 8. The Agreements contain clauses that an employee may be requested or required to work overtime hours as requested. The applicant's contentions 9. As per the agreements, the entitlement for payment of overtime worked only arises if the work performed was 'required' or 'requested' by the respective employer. 11. The employers did not require the employees to perform rostered overtime. 12. There are no specific clauses in the Agreements as to the requirement for prior approval of unrostered overtime to be performed. 13. There is no requirement in the agreements for overtime to be rostered, however the employer would have to authorise any overtime payment. There is no consistency as to how much overtime an employee may perform as it is dependent on staff availability. 14.The agreements take into consideration that it is not always reasonable or practical to predict the requirement for overtime to be worked, and that employees cannot receive prior notice that they will be required to perform additional work hours as overtime. 15. The funds from the settlement are separate from an employee's 'normal' salary or wages and reflect hours worked in excess of their ordinary hours. These will be distributed specifically to employees who worked unrostered approved overtime but were not compensated for those hours worked. Assumptions The affected employees are Australian residents for taxation purposes. Each individual employee's employment contract is consistent with ordinary hours terms and conditions within the relevant agreements.

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

Reasons for decision: Summary: The Settlement sum relates to a total amount that is being made to the affected employees to compensate for performing unrostered and previously unpaid overtime. The settlement payment is undissected as it does not identify or qualify any amount other than compensation for unpaid overtime which does not have the character of OTE. | Detailed Reasoning - Detailed reasoning: 1. 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. The minimum level of support is calculated by multiplying the charge percentage by each employee's earnings base. 2. From 1 July 2008, an employer must use OTE as defined in subsection 6(1) of the SGAA as the earnings base to calculate the minimum superannuation contributions for their employees. This ensures that all employees are treated the same for superannuation purposes. | Detailed Reasoning - Definition of ordinary time earnings: 3. Subsection 6(1) of the SGAA defines OTE in relation to an employee to mean: (a) the total of: (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 ; (C) (Repealed by No 15 of 2007) (ii) earnings consisting of over-award payment, shift loading or commission; (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. 4. Superannuation Guarantee Ruling SGR 2009/2 Superannuation guarantee: meaning of the terms 'ordinary time earnings' and 'salary or wages' (SGR 2009/2) explains that an employee's 'ordinary hours of work' are the hours specified as ordinary hours of work under the relevant award or agreement that governs the employee's conditions of employment and highlights that any hours worked in excess of, or outside the span those specified ordinary hours of work are not part of the employee's 'ordinary hours of work'. 5. SGR 2009/2 provides that a payment that is OTE will be part of salary and wages but not all salary and wages payments will be OTE. [1] 6. In the context of 'earnings in respect of ordinary hours of work', the word 'earnings' means the renumeration paid to an employee as a reward for the employee's services and for the purposes of the superannuation guarantee, the expression 'earnings' has the practical effect to mean salary or wages. [2] The ordinary meaning of salary or wages is renumeration paid to employees for their service as employees. [3] Payments are included as salary or wages if the employee is entitled to receive the payment for themselves. [4] 7. An employee's ordinary hours of work will be the hours that are specified as the employee's ordinary hours of work in the award or other document or combination thereof that governs the employee's employment. [5] 8. The Commissioner does not accept that a payment can be made in respect of employment generally without being in respect of some particular hour of work. An earning must either be in respect of ordinary hours of work and therefore OTE or it must be referrable solely to hours of work that are not ordinary hours in which case it will not be OTE, for example overtime or a payment solely referrable to overtime. [6] 9. In particular, the ruling states at paragraphs 25 and 26: 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 referable 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. 26. An award or agreement may itself have a definition of 'ordinary time earnings' that purports to apply for superannuation purposes. However, the central question posed by the definition of OTE in the SGAA is what amounts are 'earnings in respect of ordinary hours of work'. This could in some cases be a different amount from any purported amount of 'OTE' in the award or agreement. As mentioned in paragraph 13 of this Ruling, the Commissioner accepts that 'ordinary hours of work' are as determined by the relevant award or agreement, but that does not imply that OTE itself is necessarily as determined by the award or agreement. 10. The context and purpose with which the terms appear are identified at paragraphs 225 and 226: 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' 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 cognate 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. 11. Further at paragraph 228 of the SGR 2009/2, the Commissioner accepts that payments that are not salary and wages will not be OTE, for example an allowance that is intended to be entirely expended, but that otherwise a payment that is in respect of employment must be either OTE or a direct payment for overtime hours or otherwise solely referrable to hours that are not ordinary hours of work. 12. Accordingly, in line with the above, all amounts of earnings in respect of employment should be considered to be in respect of the employee's ordinary hours of work unless these are remuneration for overtime or other hours that are not ordinary hours of work. 13. Overtime is discussed further in the following paragraphs: 41. Payments for work performed during hours outside an employee's ordinary hours of work are not OTE. 42. This is so whether the payments are calculated at an hourly rate or the employee gets a specific loading, or an annualised or lump sum component of a total salary package, that is expressly referable to overtime hours as remuneration for overtime hours worked. 43. However, some employees, particularly some managers and professionals, receive a single undissected annual salary within a remuneration package that recognises in a non-specific way that the employee may often be expected to work more than the ordinary hours of work prescribed. The whole amount of salary payable under such a package is OTE, unless overtime amounts are distinctly identifiable as mentioned in paragraph 42 of this Ruling. 14. Settlements arising from disputes are discussed at paragraph 70: 70. If unpaid salary or wages are recovered by way of a settlement of a debt via court order, out-of-court settlement or negotiated settlement, and that settlement contains an identifiable and quantifiable amount of unpaid salary or wages, that amount retains its character as 'salary or wages' for SGAA purposes. However, when the amount is undissected, the whole amount is not salary or wages. | Detailed Reasoning - Application of the law to your circumstances: 15. The terms of the Deed refer to an amount known as the 'Settlement Sum'. The Deed refers specifically to unpaid unrostered overtime performed by the eligible claimant. Other than confirming that the Scheme Administrator can proactively confirm or rebut performance of unpaid unrostered overtime, the settlement itself does not refer to compensation for any other work-related activity. 16. The Settlement amounts noted in the Deed relate directly to compensation for unpaid unrostered overtime previously worked by the individuals, rather than generalised compensation for affected employees. 17. As the settlement contains an identifiable and quantifiable amount of unpaid salary or wages, that amount retains its character as 'salary or wages' for SGAA purposes. The unpaid salary and wages relate to unpaid overtime, which does not form part of OTE. It retains its character as an overtime payment. [1] SGR 2009/2, paragraph 7. [2] SGR 2009/2, paragraph 12. [3] SGR 2009/2, paragraph 60. [4] SGR 2009/2, paragraph 63. [5] SGR 2009/2, paragraph 13. [6] SGR 2009/2, paragraph 25.