{"id":285555,"date":"2025-06-24T08:15:12","date_gmt":"2025-06-24T08:15:12","guid":{"rendered":"https:\/\/www.aihr.com\/?post_type=hr-glossary&p=285555"},"modified":"2025-06-24T08:15:17","modified_gmt":"2025-06-24T08:15:17","slug":"ordinary-time-earnings","status":"publish","type":"hr-glossary","link":"https:\/\/www.aihr.com\/hr-glossary\/ordinary-time-earnings\/","title":{"rendered":"Ordinary Time Earnings"},"content":{"rendered":"\n

What are ordinary time earnings (OTE)?<\/h2>\n\n\n\n

Ordinary Time Earnings (OTE) refer to the payments an employee receives for their ordinary work hours. This figure is used to calculate superannuation guarantee (SG) contributions under the Superannuation Guarantee (Administration) Act<\/a>. OTE includes most regular earnings, such as salary, allowances, commissions, and shift loadings, but excludes overtime.<\/p>\n\n\n\n

Understanding what counts as OTE is essential for HR and payroll teams. Getting it wrong can lead to underpaid super, legal issues, and administrative headaches, especially during audits.<\/p>\n\n\n

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Why are ordinary time earnings important?<\/h3>\n\n\n\n

Ordinary Time Earnings (OTE) are the basis for payroll and superannuation compliance in Australia. Here\u2019s why HR professionals need to understand how it works:<\/p>\n\n\n\n

Superannuation Guarantee (SG) contributions are based on OTE<\/strong><\/h4>\n\n\n\n

OTE determines the minimum superannuation contribution<\/a> employers must make for their employees. The Superannuation Guarantee requires employers to contribute a percentage of an employee\u2019s OTE into their nominated super fund. Misunderstanding OTE can lead to underpayments, attracting penalties, interest charges, and reputational damage.<\/p>\n\n\n\n

It\u2019s key to payroll compliance<\/strong><\/h4>\n\n\n\n

HR and payroll teams ensure wages and superannuation payments align with the law. OTE is the benchmark the Australian Taxation Office (ATO) uses to assess super contributions. If your payroll system misclassified earnings, or if certain allowances or shift loadings were excluded incorrectly, the business could fail to meet its super obligations, even if it\u2019s paying what it believes is fair.<\/p>\n\n\n\n

It promotes transparency in employee pay<\/strong><\/h4>\n\n\n\n

When employees see their payslips and super contributions reflect their actual ordinary earnings<\/a>, trust is built, and disputes are avoided. It also ensures their future retirement savings reflect their work\u2019s true value.<\/p>\n\n\n\n

It ensures consistency across employment types<\/strong><\/h4>\n\n\n\n

Different employment arrangements (full-time, part-time, casual) can involve varying pay structures. OTE provides a consistent reference point across these types, helping HR standardize superannuation calculations and reduce confusion, especially in large or complex workforces.<\/p>\n\n\n\n

It reduces audit administrative risk<\/strong><\/h4>\n\n\n\n

If the ATO audits your organization, a well-documented approach to defining and applying OTE demonstrates due diligence. Clear internal policies and payroll processes reduce the risk of compliance breaches and costly corrections.<\/p>\n\n\n\n

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HR tip<\/strong><\/h4>\n\n\n\n

Create a simple internal reference sheet tailored to your organization’s typical roles that outlines what counts and doesn\u2019t count as OTE. This helps frontline managers avoid making informal pay promises that could lead to confusion or compliance issues.<\/p>\n<\/blockquote>\n\n\n\n

What is included in ordinary time earnings?<\/h2>\n\n\n\n

According to the ATO, the following payments<\/a> are included in OTE for calculating superannuation guarantee contributions:<\/p>\n\n\n\n