What counts as OTE
Ordinary Time Earnings is the earnings base the ATO uses to determine how much superannuation guarantee an employer must contribute. It covers what an employee earns for their ordinary contracted hours — not total earnings.
| Payment type | Included in OTE? | Notes |
|---|---|---|
| Regular salary and wages | Yes | Core component of OTE |
| Shift loadings (ordinary hours) | Yes | Loadings on ordinary hours, not overtime hours |
| Casual loading (25%) | Yes | Paid instead of leave entitlements |
| Commissions | Generally yes | Where paid for ordinary hours of work |
| Most regular allowances | Generally yes | Subject to ATO guidance on specific types |
| Paid leave (annual, personal) | Yes | Leave paid at ordinary rate |
What is excluded from OTE
Not all payments to an employee are OTE. The key exclusions matter most for payroll configuration — getting them wrong leads to either over- or under-payment of super.
Overtime pay
The single most important exclusion. Pay for hours worked beyond ordinary contracted hours does not form part of OTE and attracts no super contribution.
Expense reimbursements
Payments that reimburse actual costs (e.g. travel, tools, meals) are not OTE. These reimburse expenses rather than compensate for work performed.
Workers' compensation payments
Compensation paid under a workers' compensation scheme is not OTE — whether paid directly by the employer or through an insurer.
Certain fringe benefits
Non-cash benefits provided under a salary sacrifice or fringe benefits arrangement generally do not count as OTE for super purposes.
Termination payments
In most cases, payments made on termination of employment (redundancy, payment in lieu of notice) are excluded from OTE. There are limited exceptions — confirm with your payroll adviser.
OTE vs qualifying earnings under payday super
From 1 July 2026, Payday Super replaces OTE with Qualifying Earnings (QE) as the earnings base for super contributions. For most employees, the change is minor — but employers should understand the distinction.
| Feature | OTE (current) | Qualifying earnings (from July 2026) |
|---|---|---|
| Regular wages | Included | Included |
| Casual loading | Included | Included |
| Overtime pay | Excluded | Generally excluded |
| Scope of definition | Defined under SG legislation | Broader definition in some areas |
| Applies from | Now (until 30 June 2026) | 1 July 2026 |
Read the detailed guide on qualifying earnings for Payday Super for a full comparison, or use the Payday Super calculator to model how the change affects your payroll.
Calculating OTE: examples
The following examples show how OTE is calculated in common employment scenarios.
Example 1: Full-time employee (simple)
Scenario: A full-time employee earns $5,200 per month in base salary and works 2 hours of overtime, paid at $120 for the period.
- OTE = $5,200 (base salary only)
- Overtime excluded: $120
- Super contribution = $5,200 × 12% = $624.00
Example 2: casual employee with shift loading
Scenario: A casual employee earns $28.00/hr base, a 25% casual loading, and a 15% afternoon shift loading on 30 ordinary hours. No overtime.
- Base pay: 30 hrs × $28.00 = $840.00
- Casual loading: $840.00 × 25% = $210.00 (included in OTE)
- Shift loading on ordinary hours: $840.00 × 15% = $126.00 (included in OTE)
- Total OTE = $1,176.00
- Super contribution = $1,176.00 × 12% = $141.12
Example 3: Commission-based employee
Scenario: A sales employee earns a $3,000 base salary plus $1,500 commission paid for work performed during ordinary hours.
- Base salary: $3,000 (included in OTE)
- Commission: $1,500 (included, as it relates to ordinary hours)
- Total OTE = $4,500
- Super contribution = $4,500 × 12% = $540.00
Common OTE mistakes
Errors in OTE calculation are among the most common causes of super underpayment — and the resulting Super Guarantee Charge exposure. Watch out for these:
Including overtime in OTE
Over-paying super is unlikely to attract a penalty, but it inflates your payroll costs and may create reconciliation issues. More commonly, overtime is mistakenly included, making audits difficult.
Excluding casual loading
Casual loading is OTE. Employers who treat it as an expense reimbursement or cost-of-engagement payment and exclude it from the super calculation are underpaying their casual staff's super.
Misclassifying allowances
Some allowances are OTE; some are not. A uniform allowance is not OTE. A skills or qualification allowance paid regularly is generally OTE. Default to the ATO's published allowance guidance.
Not updating when pay structure changes
When an employee's remuneration structure changes (e.g. moving to a salary sacrifice arrangement or receiving a new allowance), the OTE calculation must be reviewed and updated in payroll.
