Is Super Paid On Gross Or Net In Australia?

If you employ staff in Australia, superannuation is not optional - it’s a core compliance item that gets checked quickly in audits and by your team. One of the most common payroll questions we hear is simple but important: is super paid on gross or net?

The short answer: Superannuation Guarantee (SG) is calculated on an employee’s gross Ordinary Time Earnings (OTE) - not their net (after-tax) pay.

In this guide, we’ll unpack what that actually means in day-to-day payroll, what counts as OTE, what doesn’t, and the grey areas like bonuses, allowances and termination payments. We’ll also share practical tips so you can set up your systems and employment contracts correctly and stay compliant as the SG rate continues to change.

Quick Answer: Super Is Calculated On Gross OTE (Not Net Pay)

Under Australian law, the Superannuation Guarantee is a percentage of an employee’s Ordinary Time Earnings. That percentage is applied to the gross OTE figure - before PAYG withholding, salary sacrifice to super, or other deductions.

From 1 July 2024, the SG rate is 11.5% (scheduled to increase to 12% from 1 July 2025). You must calculate and pay super at least quarterly, though many employers pay it each pay cycle to keep things simple.

If you’re unsure what sits inside OTE for your workforce, it’s worth reading a deeper explanation of Ordinary Time Earnings to avoid underpayments.

What Exactly Counts As Ordinary Time Earnings (OTE)?

Think of OTE as what an employee earns for their ordinary hours of work. The tricky part is that not every payment you make to an employee is considered OTE. Here’s how the common categories break down.

Generally Included In OTE (Super Payable)

• Base salary or wages for ordinary hours (the regular rostered hours, not overtime).
• Over-award payments and shift loadings tied to ordinary hours.
• Allowances that relate to ordinary hours (e.g. site allowance) and are not genuine expense reimbursements.
• Paid leave taken (annual leave, personal/carer’s leave) - because it effectively replaces ordinary hours.
• Performance-related payments such as commissions and most bonuses, where they relate to work performed. For clarity on this point, see how super applies to bonuses.

Generally Excluded From OTE (No Super Payable)

• Overtime payments - amounts paid for work performed outside the employee’s ordinary hours.
• Expense reimbursements (e.g. mileage reimbursed at ATO rates, or a tool allowance intended to offset a cost).
• Termination-specific payments such as redundancy payments, unused annual leave paid out on termination, and payments in lieu of notice. For more detail, check when super is paid on termination payments and the position on payment in lieu of notice.

Annual Leave Loading

Annual leave loading is often included in OTE, unless you can demonstrate it’s specifically for lost overtime opportunities. That’s a high bar; most employers treat leave loading as OTE and pay super on it.

Public Holidays

Ordinary hours paid for public holidays generally form part of OTE, so super applies.

Salary Sacrifice Interactions

Where an employee salary sacrifices part of their pay into super, the SG is still calculated on the OTE base before that sacrifice. In other words, salary sacrifice does not reduce the amount of SG you owe.

Gross Vs Net: How To Calculate Super In Practice

Let’s anchor the rules in some simple, real-world examples.

Example 1: Straight Salary

Employee A earns a $1,500 weekly salary for ordinary hours. They have $300 PAYG tax withheld and take home $1,200.

• Gross OTE = $1,500
• SG at 11.5% = $172.50
• Result: You pay $172.50 to their super fund. This is based on gross OTE, not the $1,200 net.

Example 2: Overtime Present

Employee B earns $1,200 in ordinary hours and $200 overtime in a week.

• Gross pay = $1,400
• Gross OTE = $1,200 (overtime excluded)
• SG at 11.5% = $138.00

Example 3: Bonus Paid

Employee C earns $1,400 in ordinary hours and receives a $600 performance bonus this pay cycle.

• Gross OTE = $2,000 (salary + bonus)
• SG at 11.5% = $230.00

Because most performance bonuses relate to work performed, they form part of OTE in many cases. If your bonus policy uses discretionary or ex gratia language, be careful with how it’s drafted and administered - the substance matters. You can review the treatment of bonuses in the context of super here: super on bonuses.

Example 4: Termination Payment

Employee D is made redundant and receives a redundancy payment and unused annual leave payout. No further hours are worked.

• Redundancy payment and unused leave payout are not OTE.
• In most cases, no SG is payable on these termination amounts. See detailed guidance on super on termination payments.

Setting Up Contracts And Payroll So You Pay Super Correctly

Getting the payroll calculation right is only half the job. You also want your employment contracts and internal policies to be clear about how remuneration is expressed, so there’s no confusion about whether a headline salary is “plus super” or “inclusive of super”.

“Plus Super” Vs “Package (Inclusive Of Super)”

Australia uses both approaches. If you advertise $80,000 + super, that means the employer pays SG on top of the $80,000. If you advertise a total package of $80,000 inclusive of super, the base cash salary is lower, with SG constituting part of the package.

To avoid disputes, lock this down clearly in your Employment Contract. If you structure offers as total package, it can help to define fixed remuneration and break out the SG component.

For more context on how pay is framed, see the difference between salary vs wages and how employers commonly answer the question “do salaries include super?”.

Award And Enterprise Agreement Considerations

If your employees are covered by a modern award or enterprise agreement, check if there are specific super clauses or different definitions of ordinary hours. Your contract and payroll settings should align with those instruments.

Bonus And Commission Plans

Because bonuses and commissions are frequently part of OTE, document eligibility, timing, and discretion in a simple policy or annexure. That clarity helps you apply super consistently across different role types.

Common Pitfalls That Lead To Super Underpayments

Super errors tend to fall into predictable patterns. The good news is you can fix most of them with a clean setup and a quick audit.

• Calculating SG on net pay instead of gross OTE.
• Omitting super on eligible bonuses, commissions and leave loading.
• Paying SG on overtime (not required) or, conversely, misclassifying ordinary hours as overtime to avoid super.
• Not updating the SG rate when it changes on 1 July.
• Failing to include sacrificed amounts back in the OTE base for SG calculations.
• Delaying contributions beyond quarterly deadlines, which can trigger the Superannuation Guarantee Charge (SGC).

It’s wise to perform a quick internal check each EOFY and whenever you change payroll software or awards. If you’re unsure about classification or special allowances, get tailored guidance early - it’s much cheaper than remediating years of underpayments.

How Super Interacts With Special Payments

Some payments need special attention to stay compliant.

Bonuses And Commissions

Most performance-based bonuses and commissions are OTE, so you pay SG on them. Consider how you word bonus clauses in your contracts and policies, and line them up with your payroll setup. A quick refresher is here: super on bonuses.

Leave Loading

Unless you can prove leave loading compensates for lost overtime (rare), treat it as OTE and pay super.

Allowances

Allowances paid for working ordinary hours (site, first aid, in-charge) are commonly OTE. Genuine expense allowances or reimbursements are not OTE. Check the purpose of each allowance and how it’s described in your employment documents.

Termination Payments

Most termination-specific amounts are not OTE. That includes redundancy pay, accrued leave cashed out on exit and many ex gratia payments. For clarity on edge cases, review guidance on super on termination payments and payments in lieu of notice.

Contractors: Do You Owe Super?

Some contractors are deemed employees for SG purposes - for example, where they’re paid wholly or principally for their labour, even if they invoice via an ABN. In those cases, the same “gross OTE” approach generally applies to the amounts that meet the tests.

This area can be nuanced. If you rely heavily on contractors, it’s worth pressure-testing your arrangements and ensuring your agreements and payroll processes reflect the law.

Compliance Checklist: Paying Super The Right Way

Here’s a simple workflow to keep your super settings accurate and consistent.

1. Define Ordinary Hours Clearly: In rosters, contracts and policies, make ordinary hours obvious so payroll can separate overtime correctly.
2. Review Pay Items: Map each pay item (salary, allowances, loadings, bonuses, commissions) to “superable” or “not superable” with references to OTE rules.
3. Set Your Remuneration Language: Decide whether offers are “plus super” or “package (inclusive of super)” and reflect this in your Employment Contract.
4. Update Your Payroll System: Confirm the SG rate and OTE mapping are up to date for each role type and award.
5. Schedule Contributions: Align contribution frequency with your payroll cycle and diarise quarterly due dates to avoid SGC.
6. Keep Records: Retain records of calculations, fund details and payments in case of audit or employee query.
7. Annual Sense-Check: Reconfirm treatment of new allowances, incentive schemes or roster changes each year or when you introduce them.

Frequently Asked Questions From Employers

Do I Calculate Super Before Or After Tax?

Before tax. Super is calculated on gross OTE, not net pay after PAYG withholding or other deductions.

Do I Pay Super On Overtime?

No. Overtime is specifically excluded from OTE. Make sure your rosters and payroll items distinguish ordinary hours from overtime.

Do I Pay Super On Bonuses?

Usually yes. Most performance-related bonuses form part of OTE. See the treatment of bonuses for super to check how yours should be handled.

Are Termination Payments Superable?

Typically no. Redundancy payments, unused leave payouts and payments in lieu of notice are generally excluded from OTE, so no SG is payable. You can confirm specifics for your scenario here: super on termination payments.

How Should I Word Salaries In Contracts?

Be explicit. State whether remuneration is “$X plus super” or “$X total package inclusive of super”, and ensure your payroll treats it accordingly. If you use package language, define fixed remuneration and list the SG component to avoid confusion. It also helps to set clear bonus and commission terms within your Employment Contract.

Key Takeaways

• Super is paid on gross Ordinary Time Earnings, not on an employee’s net pay.
• Include base pay for ordinary hours, most allowances tied to ordinary hours, paid leave and most bonuses in OTE; exclude overtime, genuine reimbursements and most termination payments.
• The SG rate is 11.5% (from 1 July 2024), increasing to 12% on 1 July 2025 - update your payroll settings accordingly.
• Be clear in contracts whether pay is “plus super” or “inclusive of super”, and align that with your payroll configuration.
• Map each pay item to “superable” or “not superable”, diarise quarterly due dates, and run annual checks to avoid underpayments and the SG charge.
• If in doubt about allowances, bonuses, or contractor arrangements, get advice - it’s far cheaper than fixing years of errors.

If you’d like a consultation on setting up your payroll and employment contracts so super is calculated correctly for your business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.