Note: This ‘Super for beginners’ article is more complex than other articles in the beginner series but the topic is very important. If you work variable hours over a week, a month or a year, or you are paid per task done, or kilometres driven, then we encourage you to continue reading.
Q: How can I tell if my husband is being paid the correct amount of super into his fund by his employer? He is a truck driver and his wage varies from week to week. I understand overtime has no super attached to it, but his wage is worked out by the kilometres he drives. Yet the same amount of super is being paid each week. I think something is wrong. How can I find out, and if it is incorrect, who do I take this to? He had a fellow work mate who left and questioned this when he began with a new employer who paid much more in super. I would greatly appreciate any help you can give me.
A: The best way to confirm your husband’s entitlements is to contact the SG hotline on 13 10 20.
Employers must pay SG on ordinary time earnings. Quoting directly from the ATO website (and the ATO wording is originally sourced from Superannuation Guarantee Ruling SGR 2009/2):
An ‘employee’s ordinary hours of work’ are the hours specified as his or her ordinary hours of work under the relevant award or agreement, or under the combination of such documents, that governs the employee’s conditions of employment…
If the ordinary hours of work are not specified in a relevant award or agreement, the ‘ordinary hours of work’ are the normal, regular, usual or customary hours worked by the employee, as determined by all the circumstances of the case. This is not necessarily the minimum or maximum number of hours worked or required to be worked.
In such cases, it may often not be possible or practicable to determine the normal, regular, usual or customary hours of work of an employee, the actual hours worked by the employee are taken to be their ordinary hours of work.
The ATO has a special page on its website explaining how ordinary time earnings for SG purposes should be calculated for long-distance drivers, such as truckies. Click here to access the page.
Tip: Click here to find a checklist to determine what is included as ordinary time earnings (OTE) for the purposes of Superannuation Guarantee.
Here are 2 examples from the ATO’s SGR 2009/2 that may be relevant to individuals paid by piece, or by kilometres driven:
Example 7: Piece-rates where no ordinary hours stipulated
Evan works as a fruit picker for Green Apples Ltd. Evan is paid 10 cents for every kilogram of apples that he picks. There are no ordinary hours specified in any award or agreement. Evan produces 5,000 kilograms of apples in his working hours in the week and so is paid $500 by Green Apples Ltd.
Salary or wages
The payment made to Evan is a reward for services he provides as an employee and is therefore ‘salary or wages’.
Ordinary time earnings (OTE)
As Evan’s ordinary hours of work are not specified in any award or agreement, his ordinary hours of work are the hours that he actually works. Therefore the $500 payment Evan receives is an entitlement accrued as a result of providing services during his ordinary hours of work. The payment received by Evan is therefore ‘earnings in respect of ordinary hours of work’ and is OTE under the [Superannuation Guarantee rules].
Example 8: Overtime component of earnings based on ‘hourly driving rate’ formula in award
Samson is employed as a long-distance truck driver. He is employed under an award which stipulates a minimum guaranteed wage payment per week, regardless of how little he actually drives. If, however, a driver travels sufficiently far in a given week, an hourly rate of pay determines the driving component of his wages in place of the minimum weekly wage. One week, Samson travels from Adelaide to Darwin via the Stuart Highway. This is stipulated in his award as a distance of 3,019 kilometres, and he is assumed to have taken 40.25 hours to complete this journey. Samson’s driving component of his earnings for this trip is worked out by multiplying the hourly driving rate by 40.25 hours. This produces a result well in excess of the minimum guaranteed payment for the week in question. Samson is therefore paid that higher amount.
The hourly driving rate incorporates two additional components: an industry disability allowance and an overtime allowance. The formula in the award stipulates that the hourly rate is determined by dividing the minimum weekly wage rate by 40 and multiplying it by 1.3 (industry disability allowance) and 1.2 (overtime allowance).
The industry disability allowance takes the place of shift-loading and various conditions-of-service allowances. The overtime allowance, by contrast, takes the place of any entitlement to be paid for overtime hours.
Salary or wages
The payment made to Samson is a reward for his services as an employee. It is ‘salary or wages’.
Ordinary time earnings (OTE)
The overtime allowance component of the payment Samson receives (being the basic hourly rate multiplied by 0.2) is not included in OTE. Under the terms of the award as a whole it is genuinely referable, albeit on a notional averaged basis, to overtime hours worked rather than ordinary hours.
The remainder of the payment Samson receives is OTE. In particular the industry disability allowance is referable, albeit on a notional averaged basis, to earnings that would be in respect of ordinary hours.