Do I have to pay compulsory superannuation on overtime amounts?

  • A recent appeal case determined ‘ordinary hours’ were the ordinary hours as set out in the relevant award or agreement.
  • Employers who use ‘annualised salaries’ in their agreements and do not expressly set out how the salary is calculated may be at risk.
  • Directors of companies may also be personally liable.

Legal update

Employers need to be careful of a couple of traps where their employees are working overtime. There will be no superannuation guarantee charge where the employer contributes the appropriate percentage (currently 9.5 per cent) of an employee’s ‘ordinary time earnings’ into their superannuation fund.

The starting position is that ‘ordinary time earnings’ means ‘earnings in respect of ordinary hours of work’. But what are ordinary hours? Are they the hours specified in the award or agreement as ordinary hours? Or are they the hours that the employee regularly works? This issue was examined by the Full Federal Court in its recent decision in Bluescope Steel (AIS) Pty Ltd v Australian Workers’ Union.

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