Private ruling: Superannuation Guarantee Obligations
Date of advice: 21 March 2019
Published: May 2019

Ruling: Q2: 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 otherwise pay the SG charge. The definition of ‘ordinary time earnings’ (OTE) is relevant to employers for the purpose of calculating the minimum level of superannuation support required for individual employees under the SGAA. Under para 25 of ‘SGR 2009/2 Meaning of the Terms ‘Ordinary Time Earnings’ and ‘Salary or Wages,’ it states that ‘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.’ 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 is designed to guarantee that all employees are treated uniformly for superannuation purposes. Note that para 13 of SGR 2009/2 states ‘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.’ The Members are not employed under a relevant award or agreement but are appointed by the Minister as the Chair Tribunal, a part-time Statutory Office. A written appointment letter is issued on appointment with reference to the Remuneration Tribunal Determination for the pay and allowances of the office holder in lieu of a formal award or agreement. Definition of ordinary time earnings (OTE) OTE, in relation to an employee, is defined in subsection 6(1) of the SGAA and means: (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 ; (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. Conclusion As the members are employees pursuant to subsection 12(9) of the SGAA, where a person who is appointed to an office or position under the law of the Commonwealth is considered to be an employee of the Commonwealth, there is an SG obligation in respect of the payments constituting ordinary time earnings.




Question 1: Individuals appointed as tribunal members are statutory office holders who hold a position to which their duties and functions are specifically assigned in legislation as opposed to individuals who carry out their duties and functions assigned to a body established in legislation. | Individuals can only be engaged by a Commonwealth Department as an employee if they are engaged under the Public Service Act 1999 (PS Act). Subsection 6(1) of the PS Act states, ‘All persons engaged on behalf of the Commonwealth as employees to perform functions in a Department or Executive Agency must be engaged under this Act, or under the authority of another Act.’ | ‘The authority of another Act’ that subsection 6(1) of the PS Act refers to is the SGAA and accords an individual with employee rights under the expanded SGAA definition. | Subsection 12(1) of the SGAA interprets ‘employee’ and ‘employer’ as having its ordinary meaning for the purposes of the Act. Subsections 12(2) to 12(11) of the SGAA expands the meaning of the terms to make provision for certain persons to avoid doubt as to their status. | Relevantly, subsection 12(9) states that: | (a) holds, or performs the duties of, an appointment, office or position under the Constitution or under a law of the Commonwealth, of a State or of a Territory; or | (b) is otherwise in the service of the Commonwealth, of a State or of a Territory (including service as a member of the Defence Force or as a member of a police force); | is an employee of the Commonwealth, the State or the Territory, as the case requires. However, this rule does not apply to a person in the capacity of the holder of an office as a member of a local government council. | Subparagraph 12(9)(a) of the SGAA states that a person who is appointed to an office or position under the law of the Commonwealth is considered to be an employee of the Commonwealth. In other words, the Commonwealth as well as tax-exempt Commonwealth authorities are employers for purposes of the SGAA. | Control: The members could not negotiate their rate of pay or terms and conditions because it is established under statute. For instance, the Member is paid for a day of meetings/hearings at a set hourly rate. | The Member is provided with an induction pack which covers the requisite legislation and sets out the internal administration matters that needs to be complied with and governs the request for other conditions including security clearances. | The Members working hours are set by themselves however these hours are determined by their applications received by the Tribunal. The Members provide monthly worksheets and invoices for payment, their remuneration determined in accordance with the ‘Remuneration Tribunal Determination 2014/08 (since superseded). | The Secretariat allocates applications to Tribunal Members as they are received. Once they are ready to proceed to hearing, the Secretariat arranges the hearing dates and locations. The Secretariat provides the final edit check of all Tribunal Reports prior to sign-off. The Executive Officer then verifies a Member’s attendance/hours claimed. | Members work in pairs or more for all reviews or inquiries. A departmental research officer is provided for each matter that works with the Tribunal Members to develop the material required for a hearing. | Members work together with departmental research staff to develop hearing material that the departmental Secretariat ultimately checks and signs off. Any such work is checked and verified through the Members supplied attendance/hours claimed. | Integration: In terms of integration following on from the above aspects of control, it is clear the Members serve their employer in the employer's business as opposed to carrying on a trade or business of their own. The role that a Tribunal Member provides in determining the merits of awarding recognition to recipients is an integral component of the tribunal’s business. | The Members do not advertise or promote their services as their hours of work are determined by their applications received by the Tribunal. The Secretariat allocates applications to Members as they are received. | The Members are provided with an induction pack which includes legislative boundaries and sets out their internal administration requirements. Members work with another appointed departmental research officer to research and recommend awards therefore there is no question they work independently of others. | Producing a result: An independent contractor typically contracts to achieve a result whereas an employee contracts to provide their labour so as to enable their employer to achieve a result. | Where the performance of a service by one party is for another, the first mentioned party is free to employ their own means to achieve the specified outcome. This is key to Tribunal Members producing a result. Their appointment is paid to achieve a result, namely they have been predominantly high ranking personnel who provide their professional knowledge and skills on specific award matters referred to them by the Secretariat. They are not employed wholly or principally for their general labour. | They are able to employ their own means in order to apply their experience, skills and standing to achieve the specified outcome, notwithstanding that there is evidence that a number of resources are provided by the department to help with the activities of the Member. The satisfactory completion of the specified services is the ‘result’ for which the parties have bargained. | Therefore, it can be concluded that the Members are wholly or principally employed to impart their expertise to achieve a result. | Delegation: The members cannot delegate other people to undertake their work. This is implied in the nature of the working arrangement and there should not be a great deal of weight applied to this fact as the Members are specifically engaged for their experience and skills. The opportunity to delegate this work would make no sense in relation to what is being arranged here. | Identification: Wearing any identification or logos is only required insofar as Tribunal Members have passes that they are required to wear on premises for security purposes.