OTE is the earnings base for calculating Superannuation Guarantee contributions including ordinary hours earnings plus certain other amounts.
Legislation: Superannuation Guarantee (Administration) Act 1992 | Category: Wages & Payment
What is Ordinary Time Earnings (OTE)?
Ordinary Time Earnings is the term used to determine the earnings base for calculating Superannuation Guarantee contributions. OTE includes the employee’s ordinary hours earnings plus certain other amounts such as over-award payments, shift loadings, allowances, bonuses, and paid leave.
The definition of OTE is set out in the Superannuation Guarantee Ruling SGR 2009/2. Correctly identifying OTE is essential for superannuation compliance, as underpayment of super based on incorrect OTE calculations is a common compliance issue.
Key Compliance Points for Employers
- OTE generally includes: base salary, allowances, shift loadings, bonuses expected for ordinary work, and commission
- OTE generally excludes: overtime, reimbursements, and lump sum termination payments (except for unused leave)
- Overtime that cannot be separately identified may need to be included in OTE
- Payments for annual leave and long service leave are OTE; payments for personal leave are not
- Errors in OTE calculation can result in Superannuation Guarantee Charge liability
Frequently Asked Questions
What is Ordinary Time Earnings (OTE)?
OTE is the earnings base for calculating Superannuation Guarantee contributions including ordinary hours earnings plus certain other amounts.
Why is Ordinary Time Earnings (OTE) important for employers?
Understanding ordinary time earnings (ote) helps employers comply with Australian employment law, avoid penalties, and maintain fair workplace practices.
