Do Employees Get Paid Superannuation On Overtime?

Superannuation comes up in almost every payroll conversation in Australia - and for good reason. It’s a core entitlement for most employees, and the rules are enforced strictly.

But when you get to overtime, things can feel murky. Should you be paying superannuation on those extra hours? What about shift loadings, weekend penalties, or salaried “all-in” arrangements?

In this guide, we’ll unpack how super works with overtime under Australian law, where employers often go wrong, and the practical steps to keep your payroll compliant and your team looked after. Whether you’re an employer setting up systems or an employee double‑checking your payslip, you’ll find clear answers below.

Quick note: superannuation law interacts with tax and payroll rules. It’s wise to check the numbers and mechanics with your accountant or payroll provider, and get legal advice where awards and contracts are involved.

What Counts As Overtime - And What Is OTE?

Superannuation Guarantee (SG) contributions are calculated on an employee’s Ordinary Time Earnings (OTE). As at 1 July 2024, the SG rate is 11.5% of OTE (scheduled to increase to 12% from 1 July 2025 under current law).

Ordinary Time Earnings are what an employee earns for their ordinary hours of work. Those ordinary hours are usually defined by an employment contract, a modern award or enterprise agreement, or (if those are silent) by what’s genuinely ordinary in the role and roster.

Overtime is typically any hours that are worked outside those ordinary hours and paid at overtime rates under an award, enterprise agreement or contract. Because overtime is not part of ordinary hours, amounts paid “for overtime” are generally not OTE - and super is not required on those overtime amounts.

If you’re looking for a deeper dive into what falls inside and outside OTE, our guide to Ordinary Time Earnings explains the key inclusions and exclusions with examples.

When Is Super Payable On Extra Hours?

The default position is simple: genuine overtime is not OTE, so you usually don’t pay super on those amounts. However, payroll setups and rosters vary, and the label “overtime” isn’t always decisive. The critical question is whether the hours are ordinary hours or not.

1) Award or Agreement Overtime (Paid at Overtime Rates)

If a modern award, enterprise agreement or contract specifies that hours above a certain threshold are overtime, and those hours are paid at overtime penalty rates, the payments for those hours are generally not OTE. Super is not required on that overtime portion.

Example: An employee’s ordinary hours are 38 per week under an award. They work 45 hours. Seven hours are overtime at the applicable penalty rate. Super applies to the earnings for the 38 ordinary hours; super is not required on the 7 hours paid as overtime.

2) Extra Hours Paid at Ordinary Rates

Some employers ask employees to work beyond the usual roster and pay those extra hours at the ordinary hourly rate (no overtime penalty). If those hours are genuinely ordinary for that role or are treated as ordinary by the applicable instrument, those amounts can be OTE and attract super.

This is a common source of confusion. The key is how ordinary hours are defined in the relevant award, enterprise agreement or employment contract. If the instrument treats those hours as ordinary (even if they extend beyond a typical day in a particular roster pattern), then super will usually be payable on them.

3) Salaried “All‑Inclusive” Arrangements

For salaried staff, contracts sometimes say the salary covers “all hours worked” or includes “reasonable additional hours.” If the contract clearly sets ordinary hours (for example, 38 hours per week) and specifies that hours beyond that are overtime (or otherwise not ordinary), genuine overtime amounts are not OTE.

Where a contract is vague and effectively treats most hours as ordinary, more earnings can fall into OTE by default. Clear drafting matters. If you need to tighten the wording, a tailored Employment Contract that defines ordinary hours and how overtime is treated will help payroll get super right from day one.

4) Shift Loadings, Penalties and Weekends/Public Holidays

Many workplaces pay loadings or penalty rates for evenings, weekends or public holidays. If those hours are part of the employee’s ordinary roster (not overtime), the associated payments are commonly OTE and attract super. By contrast, amounts paid specifically for overtime (outside ordinary hours and at overtime penalties) are generally not OTE.

5) TOIL Instead of Overtime

Some awards or agreements allow time off in lieu (TOIL) instead of paying overtime. Where TOIL replaces overtime hours (i.e., hours that are not ordinary), the underlying overtime payment is still not OTE. When the employee later takes TOIL as paid time off, how it’s treated can depend on the instrument - but the idea remains: super applies to ordinary hours, not to payments that are for overtime.

6) Casuals and Part‑Timers

Eligibility for super is not based on whether someone is full‑time, part‑time or casual - it’s about whether they’re an employee (or deemed employee) for SG purposes and whether the payment is OTE. Casual loading paid for ordinary hours is typically OTE. Overtime amounts for casuals (where the award or agreement says the hours are overtime) are not OTE.

Note that casuals don’t usually have “guaranteed” hours, but they do have ordinary hours for each engagement or roster. Super is calculated on those ordinary hours (including the casual loading), not on amounts paid for overtime.

What Earnings Usually Count Towards OTE (And What Doesn’t)?

OTE is a defined concept in super law and ATO guidance. While each workplace instrument can set different patterns of ordinary hours, it helps to understand common inclusions and exclusions.

Common OTE Inclusions

• Ordinary hours pay (salary or wages for ordinary hours of work).
• Casual loading for ordinary hours.
• Penalties or loadings that apply to ordinary hours (for example, a regular Sunday penalty in a roster where Sundays are ordinary hours).
• Commissions and most performance‑related bonuses that relate to work performed in ordinary hours - see our guide to superannuation on bonuses for finer points.
• Paid leave taken (annual leave, personal leave) to the extent it relates to ordinary hours.

Common OTE Exclusions

• Overtime payments (amounts paid specifically for overtime hours).
• Expense allowances and reimbursements (e.g., a fixed tool allowance or a meal allowance that compensates for an expense) - these are often not OTE unless the instrument or circumstances show they are part of ordinary earnings.
• Genuine discretionary bonuses (not connected to work performed in ordinary hours).
• Certain termination payments (for example, some lump sums paid on termination). For a related issue, see how payment in lieu of notice and superannuation interact.

Because “allowances” can mean different things, be careful. A shift loading that compensates for working ordinary hours at inconvenient times is often OTE, while a true expense allowance is commonly excluded. If in doubt, check the instrument and speak with your accountant.

How Do Awards, Agreements And Contracts Affect Overtime And Super?

Your legal obligations are shaped by the Superannuation Guarantee law, the Fair Work system, and what your contracts and registered instruments say. Getting the definitions right in your documents will save you headaches later.

Define Ordinary Hours Clearly

Make sure each employee’s ordinary hours are defined clearly and align with the relevant award or enterprise agreement. If your contracts are vague, payroll systems often default to treating more earnings as ordinary (and therefore OTE), which can inflate super costs or mask underpayments elsewhere.

A tailored Employment Contract can set ordinary hours, explain when overtime applies, and state how penalties and loadings are treated. If your arrangements have evolved, consider an orderly update - our guide to changing employment contracts covers the process and consultation requirements.

Align Policies And Rosters

Overtime approvals, TOIL, roster changes and record‑keeping should be consistent across your business. A clear Workplace Policy can set expectations for managers and staff, including when additional hours are approved and how they’re paid or banked as TOIL.

Check Your Payroll Setup

Payroll categories should distinguish ordinary hours, overtime, loadings and allowances. If a category is mis‑mapped as OTE when it shouldn’t be (or vice versa), you’ll overpay or underpay super. Build in periodic checks - especially after award updates or contract changes - to keep things accurate.

Mind The Intersections

Super interacts with other entitlements. For example, whether a bonus is OTE will often turn on whether it relates to performance in ordinary hours; and whether some termination amounts attract super is fact‑specific. If an issue spans multiple rules, get advice from your accountant and, where employment instruments are involved, from an employment lawyer.

Compliance Checklist For Employers

Here’s a practical list to stay on top of super and overtime compliance:

• Identify ordinary hours for each employee and confirm them against the applicable award or enterprise agreement.
• Document those ordinary hours and how overtime is treated in a clear Employment Contract and supporting policies.
• Map payroll items so ordinary hours, overtime, loadings and allowances flow correctly to OTE or non‑OTE categories.
• Audit payslips and super calculations periodically (for example, quarterly) to confirm the right OTE base is used.
• Train managers to approve additional hours properly, and to use TOIL in line with the relevant award or agreement.
• Keep thorough records of hours worked, approvals, rosters and payroll calculations (in case the ATO or Fair Work asks).
• Confirm treatment of bonuses, commissions and termination amounts ahead of time - this is where errors often creep in; our overview of super on bonuses is a useful companion to your payroll checklist.

Tip: Superannuation touches both legal and tax domains. It’s important to double‑check the treatment of complex payments with your accountant, and ensure your legal instruments support the payroll process.

Common Questions About Overtime And Super

Do Casuals Get Super On Overtime?

Casuals are generally entitled to super on their OTE, which includes their ordinary hours and the casual loading. If a casual works hours that are classified as overtime under the relevant instrument, amounts paid for those overtime hours are not OTE and don’t attract super.

What If I Paid Super On Overtime By Mistake?

Overpaying super isn’t usually a breach, but contributions are difficult to claw back. Treat it as a signal to review your payroll mappings, contracts and award interpretations so it doesn’t happen again. If you’ve underpaid super on OTE, act quickly to correct and speak with your accountant about the Superannuation Guarantee Charge regime.

Are Weekend Or Public Holiday Penalties OTE?

It depends on whether those hours are ordinary hours in the roster. If Sundays or public holidays are part of the employee’s ordinary pattern (for example, in retail or hospitality), penalties that apply to those ordinary hours are commonly OTE. Penalties paid for hours that are overtime (outside ordinary hours) are not OTE.

Is TOIL Treated Differently To Overtime?

TOIL is often an alternative to paying overtime. Where TOIL replaces overtime hours, the underlying overtime isn’t OTE. When an employee later takes the TOIL, the pay for that time typically reflects ordinary pay for ordinary hours - check the applicable instrument for precise rules.

Are Commissions And Bonuses OTE?

Commissions are commonly OTE. Bonuses that relate to performance in ordinary hours are often OTE, while genuinely discretionary or non‑performance related amounts may be excluded. The details matter, so confirm the treatment with payroll and see our guide to superannuation on bonuses for examples.

What About Payment In Lieu Of Notice (PILN)?

PILN can be tricky and may not always be OTE. The treatment depends on the nature of the payment and timing. For a deeper explanation, including when super may apply, see payment in lieu of notice and superannuation.

How Do I Know If Someone Is An “Employee” For Super?

Some contractors are treated as employees for SG purposes (for example, where they are paid mainly for their labour). If you think you might have deemed employees, get accounting and legal advice so you calculate super on the right base.

What Rate Of Super Should I Use?

From 1 July 2024, the SG rate is 11.5% of OTE. Under current legislation, it is scheduled to increase to 12% from 1 July 2025. Set calendar reminders so payroll picks up the rate change on time.

Key Takeaways

• Superannuation is calculated on Ordinary Time Earnings (OTE). Genuine overtime paid at overtime rates is generally not OTE, so it usually doesn’t attract super.
• Hours paid at ordinary rates can be OTE if they are part of ordinary hours under the relevant award, agreement or contract - the label on the timesheet isn’t decisive.
• Shift loadings and penalties attached to ordinary hours are commonly OTE, while expense allowances and reimbursements are not. Overtime penalties are not OTE.
• Make ordinary hours, overtime and loadings crystal clear in your Employment Contract and Workplace Policy, and ensure your payroll categories map correctly to OTE or non‑OTE.
• Be careful with commissions, bonuses and termination amounts. Review treatment ahead of time and use resources like our OTE guide and PILN and super explainer.
• The SG rate is 11.5% from 1 July 2024 and is scheduled to rise to 12% on 1 July 2025 - update payroll and check calculations with your accountant.
• If in doubt, get tailored advice. Superannuation rules intersect with awards, enterprise agreements and contracts, so a quick review now can prevent costly fixes later.

If you’d like a consultation about overtime and superannuation or want your employment contracts and policies reviewed, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.