Superannuation Guarantee (SG) contributions are not required on overtime pay under Australian law. This is because the SG is calculated on “ordinary time earnings” (OTE) — and overtime is explicitly excluded from OTE in most circumstances. However, the distinction can be confusing for both employees and employers.
What Are Ordinary Time Earnings (OTE)?
Ordinary time earnings is the concept used by the ATO to determine which payments attract SG obligations. In general, OTE includes:
- Regular wage or salary for ordinary hours
- Allowances paid as a regular supplement (e.g., a tool allowance included in standard pay)
- Commissions and bonuses paid for ordinary hours worked
- Paid leave (annual leave, personal leave, long service leave)
- Loading for ordinary hours (e.g., weekend penalty rates that form part of the regular roster)
Excluded from OTE (no super required):
- Overtime pay for hours worked beyond ordinary hours
- Overtime loadings
- Reimbursements
- Fringe benefits (non-cash)
- Most one-off allowances and expense payments
The Overtime Rule in Practice
If an employee works 10 hours of overtime in a pay period, the employer is not required to pay SG on that overtime component.
| Pay component | OTE? | Super required? |
|---|---|---|
| Base salary / ordinary hours | Yes | Yes |
| Annual leave loading | Yes | Yes |
| Overtime hours | No | No |
| Overtime loading | No | No |
| Penalty rates for ordinary rostered hours | Yes | Yes |
| Casual loading (on ordinary hours) | Yes | Yes |
| Bonus for ordinary performance | Generally yes | Generally yes |
Where It Gets Complicated: Mixed Loading
Some workers receive a loading that covers both ordinary hours and overtime. In these cases:
- If the loading cannot be disaggregated (no records kept), the entire payment may be treated as OTE
- Awards or enterprise agreements sometimes structure pay packages in ways that blend ordinary and overtime elements
The ATO has issued guidance (and there is case law) on this. Employers in industries with complex rostering (mining, construction, hospitality, healthcare) should seek specific payroll advice.
Can Employers Choose to Pay Super on Overtime?
Yes — paying super on overtime is legally permitted. Some employers include super in all-in packages that include overtime. Some enterprise agreements or employment contracts may also require super on overtime.
If your contract or enterprise agreement explicitly states super is payable on overtime, the employer must honour that.
Impact on Workers
If you regularly work significant overtime, your super contributions will be lower than if that income was treated as ordinary earnings. For example:
| Scenario | Annual income | OTE (super paid on) | SG at 11.5% |
|---|---|---|---|
| All ordinary time | $120,000 | $120,000 | $13,800 |
| $20,000 is overtime | $120,000 | $100,000 | $11,500 |
Over a 30-year career, this $2,300 per year difference could reduce super by a significant amount — reinforcing why voluntary contributions (concessional or non-concessional) are valuable for workers who rely on overtime income.
Frequently Asked Questions
My employer is not paying super on my overtime — is that correct? In most cases, yes — employers are not required to pay SG on overtime. However, check your employment contract or enterprise agreement, which may impose a higher obligation.
Is rostered overtime (where overtime is regularly scheduled) treated differently? Regularly rostered overtime can sometimes be classified as ordinary time if it forms a consistent and structural part of the working arrangement. This is a complex area — see your employer or an employment lawyer if uncertain.
Does salary sacrifice apply to my overtime earnings? You can choose to salary sacrifice a portion of any employment income (including overtime) into super voluntarily, as long as your employer agrees and the arrangement is in writing.
For more: Super Guarantee Rate Schedule, Salary Sacrifice Super, Super on Bonuses, Super for Part-Time Workers. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.