The ATO has released its draft ruling on 'ordinary time
earnings' for superannuation guarantee purposes - SGR 2008/D2.
When finalised, it will replace SGR 94/4.
One key issue since 'ordinary time' became the
contributions base from 1 July 2008, instead of that specified in
the award, is whether regular overtime is caught. The ATO takes the
view that it does.
Regular overtime can arise by ordinary agreement or by
industrial agreement that provides for ordinary time and any time
worked in addition to this to be paid at overtime rates.
The ATO takes the view that where the overtime is worked
regularly then superannuation guarantee (SG) applies.
The ATO comes to this view after considering the two High Court
cases Kezich v Leighton Contractors (1974) 131 CLR 362 and
Catlow v Accident Compensation Commission (1989) 167 CLR
543 and the consideration of the differing views in these two cases
is the only relevant SG case Quest Personnel v FCT (2002)
FCA 85. In Quest, in obiter it was thought that where the
ordinary time was specified in an industrial agreement, then extra
time at overtime rates did not form part of ordinary time, although
reservations were expressed on this.
On Quest's facts there was no differentiation in
pay rates and so what was actually worked was overtime on any
This approach equates ordinary time to what is ordinarily
worked. This is not the term used in the SG legislation.
Employers need to review their procedures as to what earnings
they pay SG on.
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Australian employees receive certain entitlements (such as annual leave and superannuation) where contractors do not.
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