We are all familiar with the requirement to pay our employees superannuation, whether they are full-time, part-time or casual, though it can be confusing when working out exactly who is entitled to receive super and when.
The superannuation rate is currently 9.5% of an employee’s Ordinary Time Earnings (OTE) (we’ll explain this a bit later on). The below list outlines the circumstances in which super is payable:
- Your employees are over the age of 18, (or if under 18 years of age, they work more than 30 hours per week);
- Employees earn more than $450 in a calendar month (please beware that some Awards have a minimum of $350!!);
- Payments made to contractors that meet the definition of an employee (follow this link to find out more https://www.ato.gov.au/business/super-for-employers/working-out-if-you-have-to-pay-super/contractors/)
So what is Ordinary Time Earnings (OTE) you ask? Generally speaking, OTE is made up of the following most common payment types:
- Base salary and wages (including those for annual and personal leave taken);
- Casual shift loadings;
- Unconditional Allowances (those that are paid to an employee as a course of their employment); and
- Bonuses
You do not need to pay super on payments such as overtime or allowances that are expected to be fully expended by your employee (i.e. tool allowance or travel allowances).
If you’re not sure how much super you should be paying on behalf of your employees, check out this handy tool from the ATO.
https://www.ato.gov.au/Calculators-and-tools/Super-guarantee-contributions/