Qualifying earnings for Payday Super Australia

For most employees in straightforward pay arrangements, the practical difference between QE and OTE is small. But understanding exactly what is included and excluded matters — especially for employers managing casual staff, commission-based workers, or complex pay structures. Getting the earnings base wrong means either underpaying super (and facing an ATO SGC charge) or overpaying (a cash flow drain that compounds with every pay run under the new per-payrun rules).

This guide breaks down qualifying earnings by payment type and employment category, with practical tables you can use alongside our Payday Super calculator to verify your calculations before 1 July 2026. For the bigger picture, download our free payday super e-guide.

Qualifying Earnings (QE) is the new earnings measure introduced with Payday Super to determine which payments attract the 12% superannuation guarantee. From 1 July 2026, employers calculate super by applying 12% to an employee’s QE for each pay cycle — not their total gross pay.

The ATO defines qualifying earnings as the sum of ordinary-hours earnings — including base wages or salary, casual loading, shift loadings on ordinary hours, paid leave, and most regular allowances — but excluding overtime pay, expense reimbursements, and certain termination payments. For the authoritative definition, see the ATO’s Payday Super guidance.

QE replaces OTE as the calculation base because it is designed to align more closely with the way modern pay structures work under Single Touch Payroll Phase 2 — where each payment type is separately reported and classified. Use the Payday Super calculator to model the impact of QE on your super obligations before the deadline.

For most employees in straightforward pay arrangements, there is little difference between what QE and ordinary time earnings (OTE) produce. Both are based on earnings for ordinary hours of work. The key differences appear at the margins — certain allowances, leave loading, and payment structures where OTE and QE diverge slightly in their definitions.

The practical message for most employers: your super calculation process will not change dramatically. The biggest transition task is updating your payroll system to use QE as the calculation base rather than OTE — which your payroll provider should handle via a software update before 1 July 2026. The more important focus is ensuring the underlying pay component classifications are correct.

The following payment types are generally included in qualifying earnings for the purpose of calculating the 12% superannuation guarantee under Payday Super.

For the definitive list of inclusions, refer to the ATO’s Payday Super qualifying earnings guidance. When there is doubt about a specific payment type, the ATO’s published rulings and private advice mechanisms are the authoritative route for employer certainty.

Three payment types cause the most uncertainty for employers configuring qualifying earnings — and they are exactly where competing guidance is often vague. Here is how each is treated under Payday Super.

The common thread is that qualifying earnings follow ordinary hours of work, not the label a payment carries. A regular, expected component of pay for ordinary work is almost always in; a reimbursement, an overtime premium, or a payment tied to leaving the business is almost always out.

Not all payments an employee receives are part of qualifying earnings. The exclusions broadly mirror the OTE exclusions that employers are already familiar with.

The overtime exclusion in particular requires careful payroll configuration. If your system cannot clearly distinguish between ordinary hours and overtime hours — for example, if your rostering system does not mark shifts as overtime — all hours may default to QE-included, overstating the super base. A clean pipeline from rostering to payroll is essential, and award interpretation that classifies each shift correctly is the foundation for it.

The practical application of qualifying earnings varies depending on how an employee is engaged. The table below summarises QE for the four most common employment types in Australian businesses.

Employers managing a mix of casual and permanent staff — common in hospitality, retail, aged care, and events — need to ensure their payroll system applies the correct QE rules to each employee type independently. A single misconfigured pay component that applies across all staff types can create widespread underpayment or overpayment of super simultaneously.

Casual employees have some unique characteristics that make qualifying earnings calculations both simpler and more variable than for permanent staff. For a full guide to how Payday Super affects casual workers specifically, see our guide on Payday Super for casual workers.

For a casual employee working ordinary hours, qualifying earnings are calculated as follows:

Super is then calculated as 12% of QE for that pay cycle. Use the Payday Super calculator to verify your per-cycle super obligations for casual staff with variable hours.

For businesses with large casual workforces — hospitality venues, retail chains, event companies — the per-cycle nature of Payday Super combined with variable QE means payroll must be processed accurately every single time. A roster that classifies shift types correctly (ordinary hours vs overtime, weekday vs weekend) is the foundation for accurate QE calculation. Read more on payroll cut-off best practice to keep each pay run clean.