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Re: Is superannuation payable on time in lieu?

Newbie

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Hi there,

We currently allow employees to accrue time in lieu above their ordinary hours (usually 38 hours) per week. They are allowed to either:

  • Take a day off when they've accrued 7.6 hours
  • Have the time in lieu paid out (cashed out) during their normal course of employment
  •  Paid out any outstanding entitlement upon termination

The time in lieu accrues at hour for hour and not at overtime rates.  Can you advise whether we should pay superannuation guarantee on the above?

Thanks.

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ATO Certified Response

Community Moderator

Replies 3

Hi @StaceyS

 

Welcome to our Community.

 

The minimum super you must pay each quarter for each eligible employee is called the super guarantee (SG). Currently the SG is 9.5% of their ordinary time earnings (OTE).

 

OTE is usually the amount your employee earns for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.

 

We provide a checklist on our website that you can check out for further information. This checklist is based on Superannuation Guarantee Ruling SGR 2009/2 which you can access from our legal database.

 

You will notice that the ruling make no mention of time off in lieu (TOIL). It does however say that salary or wages received at the ordinary time rate in respect of public holidays, rostered days off (RDO) and the like is OTE (refer to paragraph 33). In turn, whether SG is payable will depend on how the TOIL was accrued.

 

TOIL is often offered in place of paid overtime, e.g. three hours of overtime at time and a half equals four and a half hours of TOIL. When the employee has the TOIL paid to them (to take a day off or as a lump sum cash out), the payment that they receive is effectively an overtime payment so SG wouldn't be required (unless the award or agreement stated otherwise).

 

The fact that the TOIL accrues hour for hour and not at overtime rates would suggest that the TOIL in your scenario isn't being offered in place of paid overtime. Where TOIL is accrued in place of a payment at the ordinary time rate, the resulting day off is an RDO. As per the ruling, an RDO is considered to be OTE. In turn, a lump sum cash out of that TOIL would also be OTE.

 

You won't be able to find the above information on our website. In turn, if you would like us to take a closer look at it, you are more than welcome to write to us for interpretive assistance.

 

Hope this helps.

 

Thanks,

 

ChrisR

4 REPLIES 4

Most helpful response

ATO Certified Response

Community Moderator

Replies 3

Hi @StaceyS

 

Welcome to our Community.

 

The minimum super you must pay each quarter for each eligible employee is called the super guarantee (SG). Currently the SG is 9.5% of their ordinary time earnings (OTE).

 

OTE is usually the amount your employee earns for their ordinary hours of work. It includes things like commissions, shift loadings and allowances, but not overtime payments.

 

We provide a checklist on our website that you can check out for further information. This checklist is based on Superannuation Guarantee Ruling SGR 2009/2 which you can access from our legal database.

 

You will notice that the ruling make no mention of time off in lieu (TOIL). It does however say that salary or wages received at the ordinary time rate in respect of public holidays, rostered days off (RDO) and the like is OTE (refer to paragraph 33). In turn, whether SG is payable will depend on how the TOIL was accrued.

 

TOIL is often offered in place of paid overtime, e.g. three hours of overtime at time and a half equals four and a half hours of TOIL. When the employee has the TOIL paid to them (to take a day off or as a lump sum cash out), the payment that they receive is effectively an overtime payment so SG wouldn't be required (unless the award or agreement stated otherwise).

 

The fact that the TOIL accrues hour for hour and not at overtime rates would suggest that the TOIL in your scenario isn't being offered in place of paid overtime. Where TOIL is accrued in place of a payment at the ordinary time rate, the resulting day off is an RDO. As per the ruling, an RDO is considered to be OTE. In turn, a lump sum cash out of that TOIL would also be OTE.

 

You won't be able to find the above information on our website. In turn, if you would like us to take a closer look at it, you are more than welcome to write to us for interpretive assistance.

 

Hope this helps.

 

Thanks,

 

ChrisR

Newbie

Replies 0

Thanks Chris.  I appreciate your quick and comprehensive response.

 

Newbie

Replies 1

Hi Chris,

 

I am seeking advice regarding a similar situation. Employees currently are allowed to accrue TOIL in relation to Non-OTE hrs that is paid at ordinary rate. It also accrues hour for hour, however overtime rates differ depending on the position.

 

Example 1: we have employees paid well above award rates covered by individual agreements. They are paid at their normal hourly rate for weekend work, which is accrued as TOIL.

 

Example 2: we have employees paid under an Enterprise Agreement. They are paid at ordinary rates for travel in excess of their ordinary daily hours (in excess of 8hrs per day).

 

Would these two examples still fall under the definition of an RDO?

 

Thanks,

 

Matt

 

Community Moderator

Replies 0

Hi @MattH

 

Thanks for your post.

 

A good way of looking at it is to determine whether SG would have been payable had the employees been paid for the weekend work (example one) or excess time (example two) instead of accruing TOIL.

 

If the weekend work and excess time was paid at normal rates (not overtime) then it sounds like it is OTE. SG is payable on payments that are considered OTE. In turn, SG would be payable on the resulting TOIL payment.

 

Hope this helps.

 

Thanks,

 

ChrisR