Does Annual Salary Include Super in Australia?

Hiring or renewing contracts and not sure whether a quoted “annual salary” should include superannuation? You’re not alone - this is one of the most common payroll questions we hear from small business owners.

Getting this right matters. If your offer letter or Employment Contract isn’t crystal clear, you risk underpaying your team, breaching workplace laws, or blowing out your budget with unexpected on-costs.

In this guide, we’ll unpack what “annual salary” means in Australia, whether it includes super, how to word your offers properly, and the payroll rules you need to follow. We’ll also cover tricky scenarios like bonuses, notice payments and Ordinary Time Earnings (OTE) so you can stay compliant and payroll-ready from day one.

What Does “Annual Salary” Mean In Australia?

In everyday conversation, “annual salary” is simply a year’s pay for the work performed. Legally and practically, though, what’s included in that figure depends on how you word it.

In Australia, you’ll typically see two ways of expressing an annual salary in employment paperwork:

• “$X plus super” - superannuation is paid on top of the base salary.
• “$X package (inclusive of super)” - superannuation is part of the total package, so the cash component is $X minus the super amount.

Neither is “more correct” - but they have different budget and payroll implications. The key is to be unambiguous and consistent across your offer email, position description and contract.

If you want a deeper dive on the headline question from the employer perspective, this guide pairs well with our explainer on whether salaries include superannuation.

Does Annual Salary Include Superannuation?

The short answer: it depends on how you state it. There’s no rule that “annual salary” must include super by default. You get to choose the wording - but once chosen, “plus super” and “inclusive of super” mean different things.

Option 1: “$X Plus Super”

This means superannuation is paid on top of the salary. If you offer $80,000 plus super, the super guarantee (SG) is calculated on the applicable earnings base and added to your payroll cost.

From 1 July 2025, the SG rate is 12% (it’s set by law and may change in future). Using that rate, $80,000 plus super means an additional $9,600 in super, for a total annual employment cost of $89,600 (before other on-costs like workers compensation and payroll tax, if applicable in your state).

Option 2: “$X Package (Inclusive Of Super)”

Here, the total package includes super. If you offer a $80,000 package inclusive of super, you must carve out the super component from that $80,000 to find the cash salary.

At 12% SG, the formula to find the cash component is: Total Package ÷ (1 + SG rate). So $80,000 ÷ 1.12 = $71,428.57 base salary, plus $8,571.43 super = $80,000 total package.

Again, the wording drives the result. “Inclusive” and “plus” are not interchangeable - make sure your team understands which approach your business uses.

What If The Contract Just Says “Annual Salary $X” With No Clarifier?

If your documentation is silent, you increase the risk of disputes. In practice, many tribunals and disputes turn on what a reasonable person would infer from the full context (ads, emails, contracts, past practice).

To avoid ambiguity, always specify “plus super” or “inclusive of super” in writing and keep your paperwork consistent and up to date.

How To Word Employment Offers And Contracts (Without Confusion)

Clarity now prevents headaches later. Use consistent, plain-English wording from first contact through to your signed agreement.

Recommended Wording Examples

• Plus Super: “Your annual salary is $80,000 plus superannuation at the statutory rate.”
• Inclusive: “Your total remuneration package is $80,000 inclusive of superannuation at the statutory rate.”

You can also add a line noting that the SG rate is set by legislation and may change in future.

Reflect The Figure In The Contract

Your contract should mirror the offer wording and specify what happens when the SG rate changes (e.g. whether the package stays fixed or the cash salary adjusts). It’s also best practice to attach a pay summary or schedule setting out the current break-up of base salary and super.

If you’re issuing new terms, a tailored Employment Contract keeps everything aligned with the Fair Work framework and reduces the risk of disputes.

Be Consistent Across Documents And Systems

Make sure your HRIS/payroll settings align with how your contracts are drafted. For example, if you pay “plus super”, confirm your payroll software is not treating the amount as inclusive.

If you hire casuals or mixed teams, use the correct form of contract for each cohort, such as a casual Employment Contract where appropriate.

Calculating Super: OTE, Bonuses And Common Edge Cases

Once you’ve nailed the wording, the next step is knowing what earnings you must pay super on. The key concept here is Ordinary Time Earnings (OTE).

Ordinary Time Earnings (OTE)

Generally, SG is calculated on an employee’s OTE - the ordinary hours’ earnings, including certain allowances and loadings. Understanding the OTE basis helps you avoid underpayments and make accurate contributions.

For a practical overview, see our guide to Ordinary Time Earnings (OTE).

Are Bonuses Included?

It depends on whether the bonus counts as OTE. Many “ordinary” performance bonuses that relate to ordinary hours form part of OTE, but not all bonuses are treated the same way. The safest approach is to check the nature of the payment and how it’s documented.

We’ve covered common scenarios and what to watch for in Superannuation on Bonuses.

What About Overtime?

Genuine overtime (outside the employee’s ordinary hours) is generally not OTE. However, this turns on the contract, award or enterprise agreement - and how “ordinary hours” are defined in those instruments. Get clear on your team’s ordinary hours in your contracts and rosters to support the correct super calculation.

Payment In Lieu Of Notice, Redundancy And Termination Payments

Not every termination payment attracts super. As a rule of thumb, accrued but unused leave or redundancy payments may be excluded from OTE, while certain other amounts might still attract super depending on their character.

Because mistakes here are common (and costly), it’s worth checking edge cases, including payment in lieu of notice and superannuation and super on termination payments.

Award, Enterprise Agreement Or Contract Interactions

Your employee’s award or enterprise agreement can affect what counts as ordinary hours, as well as minimum pay rates, loadings and allowances. Even for “salaried” staff, you still need to ensure the total package meets or exceeds minimum entitlements.

If you’re not sure whether an employee is covered or how a classification works, our team helps employers navigate Award compliance so you can pay correctly and avoid penalties.

Payroll And Compliance Checklist For Employers

Here’s a simple, employer-focused checklist to keep your remuneration settings clear and compliant.

1) Choose Your Remuneration Format (And Stick To It)

• Decide whether you’ll quote salaries as “plus super” or “inclusive of super”.
• Update your templates, job ads and onboarding emails so wording is consistent.
• Clarify what happens when the SG rate changes (e.g. total package fixed vs cash salary fixed).

2) Put It In Writing (Properly)

• Use a tailored Employment Contract that sets out base pay, super and entitlements in plain English.
• Include a remuneration schedule showing the split between base and super as at the start date.
• If you have co-founders or equity arrangements, consider whether a Share Subscription Agreement or a Shareholders Agreement is needed to document ownership and incentives separately from salary.

3) Configure Payroll For Accuracy

• Confirm your payroll software is calculating SG on the correct earnings base (OTE, not total package unless appropriate).
• Check pay categories for allowances, loadings and bonuses so super is added where required.
• Set reminders for SG payment due dates to avoid charges or penalties.

4) Align With Awards And Rosters

• Verify whether the role is award-covered and that the salary meets minimums once loadings/penalties are considered.
• Define ordinary hours clearly in the contract and roster to distinguish them from overtime.
• Review classification levels when roles change to avoid inadvertent underpayments.

5) Document The Extras

• Outline eligibility rules for bonuses or commissions and whether they’re discretionary.
• Be clear on allowances, expense reimbursements and benefits (e.g. vehicle, phone) and whether they’re part of the package.
• House key policies (leave, expenses, performance, conduct) in a Staff Handbook; we can help you build a practical Staff Handbook tailored to your business.

6) Review At Each Pay Cycle Or Change

• Double-check SG and PAYG withholding when someone moves role, gets a pay rise or earns a one-off bonus.
• On separation, run through termination pay and super rules for each component paid.
• Keep a simple audit trail - payslips and contribution receipts are your best defence if questions arise.

Common Mistakes (And How To Avoid Them)

Even careful employers can run into trouble. Here are the errors we see most often - and how to steer around them:

• Ambiguous Salary Wording: Avoid bare “annual salary $X” statements. Add “plus super” or “inclusive of super” everywhere you mention pay.
• Assuming All Bonuses Are Excluded: Some bonuses are OTE. Document bonus plans clearly and review against OTE rules.
• Misclassifying Ordinary Hours: If rosters or contracts are vague, you can miscalculate super. Set ordinary hours plainly in writing.
• Not Updating For SG Increases: Build in a clause acknowledging legislative changes and adjust payroll settings as SG rates change.
• Salary “Offset” Assumptions: If you’re paying a high salary to cover penalties/loadings, you still need to show the employee is better off overall. Good contracts and regular checks against award minimums are essential.

FAQs Employers Ask About Salary And Super

Is Super Included In A Salary Advertised On A Job Board?

It depends on the wording. Many platforms let you select “plus super” or “inclusive” - but don’t rely on that label alone. Your offer email and contract must match the intent to avoid disputes.

Can I Switch From “Plus Super” To “Inclusive Of Super” Mid-Employment?

Not unilaterally. This is a change to remuneration terms and usually requires consultation and consent. If you’re restructuring packages, issue a written variation for the employee to agree and sign.

Do I Need To Pay Super On Allowances?

Some allowances (that relate to ordinary hours) may be OTE, while others (e.g. expense reimbursements) usually are not. Map each allowance type to the correct pay category and sanity-check against OTE rules.

We Pay An “All-In” Salary - Are We Covered?

“All-in” salaries can be lawful, but they must keep the employee better off than the award overall. You’ll still need to track hours and conduct regular reconciliations to ensure the salary covers what is owed. A clear Employment Contract and periodic reviews are essential.

Key Takeaways

• “Annual salary” can be either “plus super” or “inclusive of super” - the wording you choose drives how much you pay and how you budget.
• Super is generally calculated on Ordinary Time Earnings (OTE), so understand what earnings count (and don’t) to avoid underpayments.
• Bonuses, allowances and termination amounts aren’t all treated the same for super - check the rules for each category before you run payroll.
• Spell out remuneration clearly in a tailored contract, keep your payroll settings aligned, and review figures whenever roles, rates or SG change.
• Award coverage still matters for salaried staff - ensure the package keeps employees better off overall and document your approach.
• Clear documents and consistent processes will minimise disputes and help you stay compliant as your team grows.

If you’d like a consultation on structuring salaries and super for your team, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.