Updated on 8 December 2023
5 minute read
You might be wondering if you're being paid super for overtime work. Super is paid on your ordinary time earnings (OTE). Let’s find out what’s included in OTE and how your overtime earnings can boost your super.
OTE is what an employee earns for their day-to-day hours of work. Any payment outside of this generally doesn’t contribute towards your super.
In Australia, your employer must pay at least 11.5% of your OTE to your super fund. This is based on the super guarantee (SG) rate – a percentage of your salary that must be paid towards your super, in addition to your OTE.
Regular wages
Casual and shift loading
Annual leave, sick leave or long service leave
Commissions
Over-award payments
Bonuses
Overtime pay
Reimbursements
Fringe benefits
Expense allowances
Parental leave
Understanding what's included in OTE helps you to make sure you're getting paid the right amount of super and plan for your retirement savings.
It's possible to get paid overtime as a casual, part-time, full-time, or contracted employee. Overtime hours are any hours that are worked outside of your agreement with your employer. Fair Work Australia says this agreement might take place in one of the following:
Depending on your agreement, your employer might pay you for overtime hours worked or even offer time in lieu or other non-monetary benefits. You should always keep an accurate record of overtime hours worked with your employer to make sure you can claim what you're entitled to - be it in cash or kind.
When you can get paid super on overtime.
Although super is generally not paid on overtime hours, there are some exceptions to this rule.
Even though you won’t be paid super on your overtime hours, you can still use your extra earnings to grow your super balance.
Directing more of your salary toward your super can help you boost your retirement savings. Think about making contributions before or after tax, depending on your current situation and goals.
Salary sacrificing allows you to contribute extra payments to your super from your salary before tax is calculated. This means that you could pay less tax on your income whilst increasing your super contributions.
If you’re working frequent overtime hours, it might be worth putting those extra earnings towards your super. This will allow you to take advantage of the compounding effect and you could save on tax. But salary sacrificing might not be as tax-effective for low-income earners. If you’re a low-income earner and looking for ways to boost your super, there are other contribution options.
Voluntary contributions allow you to add extra to your super after you’ve been paid. This means that your employer has already paid the tax from your salary on your behalf. This option offers more flexibility as you can choose between a once-off or ongoing payment. Plus, you might be able to claim a tax deduction on these payments.
Keep in mind there are some caps and rules which limit the amount you can add to your super.
If you want more flexibility with your overtime pay, this might be an option for you. You may not get the best tax benefit, but you can invest your savings and make bulk voluntary contributions to continue to grow your super.
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