Ordinary Time Earnings (OTE) are the earnings an employee receives for their ordinary hours of work and are generally used to calculate an employer's minimum superannuation guarantee obligations.
What are Ordinary Time Earnings (OTE)?
Ordinary Time Earnings (OTE) is a key concept in Australian payroll and superannuation. It refers to the earnings paid to employees for their ordinary hours of work and forms the basis for calculating the minimum superannuation guarantee contributions that employers must make for eligible employees.
OTE generally includes payments such as ordinary salary and wages, commissions, shift loadings and casual loadings earned during ordinary working hours. However, not all payments made through payroll are included in OTE. Certain payments, such as genuine overtime worked outside an employee's ordinary hours, are generally excluded.
Accurately identifying OTE is an important payroll responsibility because it affects superannuation calculations, compliance obligations and workforce costs. Employers need to understand which earnings count towards OTE to help ensure employees receive the correct super contributions.
Things to know
- OTE is used to calculate minimum superannuation guarantee contributions.
- OTE generally includes earnings for ordinary hours of work, including some loadings and commissions.
- Genuine overtime payments are generally not included in OTE calculations.
- Awards, agreements and employment arrangements can affect how ordinary hours are determined.
- In Australia, OTE most commonly means Ordinary Time Earnings, although in recruitment and sales contexts it can also refer to On-Target Earnings.
FAQs
Which payments are usually included in OTE?
OTE generally includes salary and wages for ordinary hours, commissions, casual loadings and many shift loadings or penalty payments that relate to ordinary hours of work.
Does overtime count towards OTE?
Genuine overtime payments are generally excluded from OTE when they relate to hours worked outside an employee's ordinary hours of work.
Why is OTE important for payroll?
OTE is used to calculate minimum superannuation guarantee contributions. Incorrect OTE calculations can lead to underpayments, compliance issues and additional administration for employers.
Can allowances be included in OTE?
Some allowances may be included in OTE, depending on the nature of the payment and whether it relates to ordinary hours of work. Employers should assess allowances carefully when calculating superannuation obligations.
How can employers reduce the risk of OTE calculation errors?
Clear payroll processes, accurate earnings classifications and regular reviews of superannuation calculations can help employers apply OTE consistently and meet their obligations.
