Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Superannuation is a cornerstone of the Australian employment system. If you employ staff, understanding how superannuation interacts with salary isn’t just about ticking a compliance box - it helps you budget properly, communicate clearly with your team, and avoid penalties.
You might be asking: Is super paid on top of wages or included in the total package? What counts as ordinary time earnings (OTE)? How do salary sacrifice and bonuses fit in? And what’s the current Superannuation Guarantee (SG) rate?
In this guide, we break down superannuation salary in plain English. We’ll cover how to structure offers, what to include in your payroll calculations, key deadlines, and the edge cases that commonly trip up employers. We’ll also point to the core legislation and where the Australian Taxation Office (ATO) comes in - so you’re confident you’re meeting your legal obligations.
Important note: This article provides general information only and doesn’t constitute tax advice. Superannuation often overlaps with tax rules, so it’s best to check specifics with your accountant or the ATO if you’re unsure.
What Is Superannuation Salary In Australia?
Superannuation salary refers to the part of an employee’s earnings that you must use to calculate compulsory super contributions. In practice, that means the SG applies to an employee’s ordinary time earnings (OTE), subject to limited exceptions.
Employer super obligations arise under the Superannuation Guarantee (Administration) Act 1992 (SGAA). The ATO administers SG obligations - including setting due dates, collecting the Superannuation Guarantee Charge (SGC) if payments are missed, and publishing guidance on how to calculate OTE.
In short: If an employee is eligible for super, you must contribute a fixed percentage of their OTE to a complying super fund by the due date. Most employers pay super each pay cycle (even though the law sets quarterly deadlines) because it’s easier to stay on track and demonstrate compliance.
Is Super Paid On Top Of Wages Or Included?
Both approaches are common in Australia. The key is to be explicit and consistent across your job ads, offer letters, and employment contracts.
Salary “Plus Super”
Many roles are advertised as “$X per year + super.” In this case, $X is the base salary, and you pay the SG percentage on top of that figure. This approach is simple and transparent for employees and employers alike.
Total Package “Including Super”
Some offers state “$X including super” (often for senior roles with total remuneration packages). Here, the super component is included within the $X. You must still ensure that the base salary component (exclusive of super) meets minimum wage or award requirements and that you calculate SG correctly on OTE.
If your documentation isn’t clear, disputes can arise. It’s good practice to spell out the base salary amount and the super component separately on the offer letter and payslips, and ensure the Employment Contract reflects the agreed structure.
If you want a deeper dive into packaging, this overview of Do salaries include super? walks through common scenarios and what to look for in contracts and payroll.
How Much Super Do Employers Pay (And When)?
The SG rate is increasing in small increments each year until it reaches 12%.
- From 1 July 2024: 11.5%
- From 1 July 2025: 12%
You must pay the SG percentage of an employee’s OTE to their nominated fund by the statutory quarterly due dates (many employers pay more frequently through payroll to stay organised).
Deadlines And The Superannuation Guarantee Charge (SGC)
- Payments are due 28 days after the end of each quarter (e.g. 28 October for the July–September quarter).
- If you miss a deadline, you may have to lodge and pay the SGC to the ATO. The SGC includes the shortfall, interest, and an admin fee - and SG payments made late don’t count towards your obligations for that quarter.
Timely payments and good records are your best protection. Show the super amount on payslips and keep evidence of contributions to each fund.
What Counts As Ordinary Time Earnings (OTE)?
Super is calculated on OTE - generally, what an employee earns for their ordinary hours of work. Determining OTE correctly is crucial, and it’s a common source of confusion.
Common Inclusions
- Ordinary wages and salaries for standard hours
- Shift loadings, most allowances that are paid for ordinary hours, and certain commissions
- Paid leave for ordinary hours (e.g. annual leave, personal leave)
Whether an allowance forms part of OTE depends on what the allowance is for and when it is paid. For example, leave loading is generally included in OTE when it is paid in respect of ordinary hours.
Common Exclusions
- Overtime payments (for hours outside ordinary hours)
- Expense reimbursements
- Certain termination payments and accrued leave paid out on termination (subject to specific rules)
The ATO sets out detailed examples, but as a starting point, your OTE should reflect ordinary hours, not overtime. If you want a refresher on the concept, this overview of Ordinary Time Earnings is a helpful primer.
Contractors, Bonuses And Salary Sacrifice: Common Edge Cases
Even with clear rules, edge cases can complicate your SG payments. Here are the ones we see most often.
Contractors Paid Mainly For Labour
Some contractors must be paid super even if they have an ABN. If you’re engaging a worker who is paid mainly for their labour (rather than a result-based outcome with substantial use of their own equipment), SG may apply as if they were an employee for super purposes.
To reduce risk, ensure your classification is correct and your contracts reflect the actual working relationship. If you’re uncertain about a particular engagement, consider tailored employee vs contractor advice before confirming the arrangement.
Bonuses And Commissions
Whether super applies to bonuses depends on how and why the bonus is paid. For example, a bonus that is connected to ordinary hours or performance may be OTE, whereas a one-off discretionary payment may not be. The ATO’s view and awards can influence treatment, so it’s sensible to set a clear internal position and document it.
For more on typical scenarios, see a practical overview of superannuation on bonuses.
Salary Sacrifice Arrangements
Employees can salary sacrifice part of their pre-tax pay into super, and many employers facilitate this through payroll. Since 1 January 2020, salary sacrifice contributions cannot be used to reduce your minimum SG obligation. You must calculate SG on the employee’s OTE base as if no salary sacrifice had been made and pay the SG amount on top.
Make sure your payroll system handles this correctly and that your Employment Contract or remuneration letter explains how salary sacrifice works - including timing, limits, and your ability to vary or suspend arrangements if required by payroll deadlines or law.
Termination Payments
Not all termination payments attract super. For example, redundancy payments don’t generally form part of OTE. However, statutory entitlements for ordinary hours that are paid out while employment continues are treated differently to entitlements paid on termination, and the SG treatment can vary by component.
Where you agree to end employment early, the interaction between payment in lieu of notice and SG is specific - check the current ATO guidance and your award or enterprise agreement before processing.
What Should Go In Your Contracts, Payslips And Payroll Process?
Clear documents and consistent processes are your best defence against SG errors. Here’s what to lock in.
Employment Contract
- Specify whether remuneration is “plus super” or “inclusive of super,” and set out the current SG rate with a note that it varies in line with the law.
- Confirm what counts as OTE for your payroll (subject to law) and how bonuses, allowances and loadings are treated.
- Include rules for salary sacrifice (e.g. cut-off dates, consent, caps, and that SG is paid on OTE irrespective of salary sacrifice).
Using tailored terms in your Employment Contract helps prevent confusion and keeps your payroll consistent with the offer your employee accepted.
Payslips And Records
- Show base salary, allowances, loadings, super contributions, and fund details clearly on the payslip.
- Keep evidence of each contribution (amount, fund, and period covered) - and reconcile quarterly to avoid SGC issues.
- Provide a Standard Choice form and act on fund choices within the required timeframe.
Payroll System Settings
- Set the correct SG rate for each period (11.5% from 1 July 2024; 12% from 1 July 2025).
- Ensure the OTE mapping is accurate (e.g. overtime excluded, applicable allowances included).
- Configure salary sacrifice so SG is calculated on the pre-sacrifice OTE base.
If your business pays allowances frequently, decide and document how each allowance is treated. For example, a travel or meal allowance may be treated differently to a tool allowance; get the classification right upfront. When in doubt about loadings, this short explainer on leave loading is a useful reference point as you map categories to OTE.
Practical Scenarios To Sense‑Check
- “Including super” package: Is the base salary (exclusive of super) still at or above the relevant award or National Minimum Wage once you separate it out?
- Commission-heavy roles: Do your contracts describe how commissions are earned and whether they are OTE for super purposes?
- Contractor engagements: Does the agreement reflect reality, and have you checked whether SG applies for contractors mainly paid for labour?
- Bonuses: Are you consistent about which bonuses attract SG and why? Is that reflected in your policy and payroll settings?
When To Get Advice
It’s worth seeking tailored guidance if you’re changing your remuneration model, engaging contractors at scale, or building a bonus plan. Payroll complexity adds up quickly, and small classification errors can create large SG shortfalls over time.
Key Takeaways
- Employer super obligations sit under the Superannuation Guarantee (Administration) Act, administered by the ATO; you must pay the SG percentage of ordinary time earnings for eligible employees by the due dates.
- The SG rate is 11.5% from 1 July 2024 and is legislated to rise to 12% from 1 July 2025 - update your payroll settings and contracts accordingly.
- “Plus super” and “including super” are both valid ways to package salary, but you must be explicit in your offers, contracts and payslips so the split is clear and compliant.
- Get OTE right: ordinary hours, relevant allowances and certain bonuses are typically included; overtime and reimbursements are not. Document your approach and align payroll categories to OTE.
- Salary sacrifice can’t reduce your minimum SG - calculate SG on the pre‑sacrifice OTE base and pay it on top.
- Some contractors are entitled to super if they’re mainly paid for labour. Review your engagement model and seek advice where the classification isn’t clear.
- Strong documentation (Employment Contract, payslips, choice forms) and timely contributions help you avoid the SGC and keep your team informed and confident.
If you’d like a consultation on superannuation salary or any other employment compliance questions, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
