The Australian Taxation Office (ATO) reported that workers lose more than $4.7 billion in unpaid super every year, and changes are afoot to crack down on non-compliant employers. With Payday Super changing how businesses handle contributions, understanding the core concepts is the best way to stay ahead. It all starts with getting a handle on Qualifying Earnings (QE).
What are Qualifying Earnings (QE)?
Qualifying Earnings are the specific amounts an employee earns that are subject to the superannuation guarantee (SG) under the new Payday Super legislation. It’s a standardised definition of salary and wages created to give every business in Australia a single, clear checklist for calculating super. No more grey areas or guesswork.
Think of QE as the specific list of payment types that are subject to superannuation contributions under the Payday Super legislation. It’s the new baseline for working out how much super you pay your employees each payday. This approach creates a clear, consistent standard for everyone, making payroll simpler and more transparent. The goal is to make sure your team gets their super entitlements accurately and on time, every time you run payroll.
How is QE different from Ordinary Time Earnings (OTE)?
You might be wondering how this new term fits in with Ordinary Time Earnings (OTE), which has been the standard for years.
While QE and OTE are very similar, they are not identical. OTE is the measure used for calculating quarterly Superannuation Guarantee (SG) contributions. QE is the new standard specifically for the Payday Super model, where super is paid at the same time as salary and wages. The government designed QE to align closely with an employee’s regular take-home pay, removing some of the ambiguity that can come with OTE calculations. This direct alignment helps you pay your team with confidence quickly and accurately.
What is included in QE?
Here’s a straightforward breakdown to help you get it right every pay run.
What counts as QE:
- Base salary and wages: This is the standard amount an employee earns for their ordinary hours of work.
- Commissions and bonuses: Performance-based payments and bonuses are generally included in QE.
- Allowances: Most allowances, such as those for special skills, qualifications, or specific duties, are part of QE.
- Paid leave: Any earnings an employee receives while on annual leave, personal leave, or long service leave.
What is not QE:
- Overtime payments: Payments for hours worked outside an employee’s ordinary hours are typically excluded.
- Reimbursements: Payments made to an employee to cover specific work-related expenses are not part of QE.
- Termination payments: Lump sum payments made upon the termination of employment are not included.
What is the purpose of QE for Payday Super?
Worried about making mistakes with the new Payday Super rules? Qualifying Earnings is designed to give you clarity and confidence.
The main purpose of QE is to standardise the superannuation calculation process for the Payday Super system. By providing a clear and consistent definition of which earnings are subject to super, QE removes guesswork from your payroll. This ensures that employees receive their correct super entitlement with every single paycheque. This structured approach directly addresses the pain point of payroll compliance, providing a tangible benefit: you get to reduce errors and stay compliant effortlessly.
Get ahead of superannuation compliance changes
Struggling to keep up with ATO requirements and terms like Qualifying Earnings? Payroll compliance can be challenging, but it’s crucial.
Payroller is designed to make these changes simple. We automate payroll tax calculations and superannuation payments, so you can stay compliant and error-free with every pay run. Instead of spending hours worrying about payroll mistakes, you can pay your team in minutes and get back to focusing on your business. Let’s simplify payroll, together.