Employers often ask us whether they need to pay superannuation on payments on certain allowances or payments.
Under SGR 2009/2, superannuation is payable on ordinary time earnings. Therefore for each payment you will need to determine whether it is ordinary time earnings or not. Generally ordinary time earnings relate to the normal hours that an employee works.
Let’s take an on-call allowance as an example. If the on-call allowance relates to an employees ordinary hours, then superannuation will be payable. However, if the on-call allowance is paid in respect to overtime hours, then superannuation is not payable.
The same concept applies to bonuses. Unless the payment relates specifically to overtime, or there are certain identifiable restrictions such as sign up bonuses, superannuation is required to be paid.
Other examples of where superannuation is payable are piece rates, casual shift loading, workers’ compensation payments where the employee has returned to work, annual leave, sick leave and long service leave, any in lieu of notice payments in a termination calculation, performance bonus and Christmas bonus.
Examples of where superannuation is not required to be paid include casual overtime, workers’ compensation payments when the employee is not working, parental, jury or defence force leave, unused annual, sick or long service leave on termination or any bonus in relation to overtime.
As always, if you have any questions regarding this, please contact the APA team on 02 9818 1931.
Tracy Angwin is the founder and managing director of the Australian Payroll Association.
Tracy is the founder and chief executive officer at the Australian Payroll Association and the director of Payroll HQ.
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