Summarise with AI
Two different meanings, same three letters
This is the most confusing acronym in Australian pay, because both expansions are in daily use and they mean completely different things.
- On-target earnings — a sales and recruitment term. Base salary plus variable pay assuming targets are met. Used in job ads and offers.
- Ordinary time earnings — a superannuation term. It is the earnings base your employer super contributions are calculated on.
If the document is a job ad, it means on-target earnings. If it is a payslip, a super calculation or anything from the ATO, it means ordinary time earnings — and that is the meaning with legal consequences.
How on-target earnings is built
On-target earnings is a projection, not a guarantee. It is normally quoted as:
Base salary + variable component at 100% of target = OTE
A role advertised at “$90,000 + super, $120,000 OTE” is offering a $90,000 base with $30,000 of commission available if every target is met. What matters when you read one is the split: a 50/50 base-to-variable role and a 90/10 role can advertise the same OTE and carry very different risk.
Also check whether the figure includes superannuation, whether the variable component is capped, and whether commission is paid on invoice or on collection.
Why ordinary time earnings matters more
Superannuation guarantee is calculated on ordinary time earnings, not on gross pay. Getting the boundary wrong is one of the most common and most expensive payroll errors in Australia, and it happens in both directions.
Broadly, overtime is excluded from ordinary time earnings, while most penalty rates, loadings, allowances, commissions and paid leave are included. Casual loading forms part of it, which matters a great deal in a business with a large casual workforce.
A late or short contribution becomes a superannuation guarantee charge, which is not tax deductible and carries interest and an administration component. See superannuation guarantee for the detail.
Key takeaways
- On-target earnings = base pay plus variable pay at 100% of target — a projection in a job ad
- In Australia, OTE much more often means ordinary time earnings, the superannuation base
- Overtime is generally excluded from ordinary time earnings; most penalties and loadings are included
- When you see OTE, check the document type before assuming which meaning applies
Our superannuation reconciliation template calculates the contribution from the ordinary-time-earnings base rather than from gross.
RosterElf calculates ordinary time earnings on every timesheet, so the superannuation base is right before the pay run — not reconstructed afterwards.
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