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 view.
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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