Unpacking Qualifying Earnings for employers

When the Australian Government announced their Payday Super plans, which will require employers to align employee super payments to be paid at the same time as salary and wages, they also introduced a new term, ‘Qualifying Earnings’ (QE).

The intent of QE is to clearly define employee earnings that qualify for super, while setting apart payments that don’t.

QE is designed to stop the guesswork, removing uncertainty by giving businesses a single clear list of payment types to use when calculating super.

What counts as Qualifying Earnings?

Base salary and wages, ordinary hours of work
Salary Sacrifice, which would have been considered ordinary hours prior to sacrifice arrangements
Commissions and bonuses, performance-based payments
Allowances, for skills, qualifications, or specific duties (e.g., first aid)
Paid leave, annual leave, personal leave, long service leave

Employers will also need to consider payments to workers who are treated as employees for super, including some contractors who are paid mainly for their labour.

Retail worker scenario

Using a retail worker as a guide, here’s an example of how employers can determine what counts as QE.

Employee: Sarah works at a clothing store as a full-time retail assistant.

As a full-time employee, Sarah’s hourly rate is $28, and she works 38 ordinary hours per week. Plus, she receives an additional $20 per week as the store’s designated first aid officer.

In the month of June, Sarah works 10 hours of overtime, earns an extra $500 in monthly sales commissions for meeting the store's targets; she takes one week of paid annual leave, plus one week of paid sick leave.

What counts as QE for Sarah?

Month: June (4 weeks)
Base salary and wages: $28 per hour for 38 ordinary hours of work.
Overtime: 10 hours of overtime
Commissions and bonuses: Sarah earns $500 in monthly sales commissions
Allowances: $20 per week allowance for being the store's designated first aid officer
Leave taken: 1 week paid sick leave and 1 week paid annual leave

Sarah's June Qualifying Earnings

Payment type	Total amount	Counts as Qualified Earnings?
Ordinary hours (2 weeks)*	$2,128.00	Yes
Annual leave (1 week)	$1,064.00	Yes
Paid sick leave (1 week)	$1,064.00	Yes
First-aid allowance	$80.00	Yes
Commission	$500.00	Yes
Overtime (10 hours)	$280.00	No
Total QE	$4,836.00

Offering your employees choice of super fund

Understand employer obligations when onboarding new employees, including offering a choice of super fund, default super funds and employer responsibilities.