Think of qualifying earnings as a broader, tidied-up version of ordinary time earnings (OTE). It's the standardised earnings base that every employer will use to work out both the superannuation guarantee (SG) amount and any super guarantee charge (SGC) from 1 July 2026. 

If you've ever been confused by the term "ordinary time earnings," you're not alone — and that confusion is part of why QE exists. Both the ATO and Fair Work use the phrase "ordinary time earnings," but they define it differently. The ATO's version determines super obligations, while Fair Work's version relates to award entitlements like penalty rates and leave loading. Having two definitions with the same name caused no end of headaches for payroll teams. QE sidesteps that problem entirely by introducing a standalone term specifically for super guarantee purposes, so there's no more cross-referencing between two competing definitions. 

Here's the thing most employers will be relieved to hear: if you're already calculating super correctly on OTE, QE probably won't change your numbers much. The two are very similar. But there are a few differences worth noting, especially if your team earns commissions. 

You'll also need to report QE alongside the super liability for each employee through Single Touch Payroll (STP) every time you run payroll, starting from 1 July 2026. This new requirement means payroll managers should plan system and process updates in advance. More on that later. 

QE is made up of four buckets of payments. 

Ordinary time earnings  

These still form the backbone. We're talking base salary and wages for ordinary hours, most types of paid leave (annual leave, personal leave, long service leave taken during ordinary hours), work-related allowances tied to ordinary hours, bonuses linked to ordinary time work, and back-pay or lump sums for ordinary hours. None of the OTE rules has changed under Payday Super — if it was OTE before, it's still OTE now. 

All commissions  

This is where it gets interesting. Under the current system, if an employee earned a commission purely for work done outside their ordinary hours, the ATO accepted that it wasn't OTE, so no super was owed on it. That's gone. Under QE, every commission paid to an employee counts, full stop. Doesn't matter when the work happened. For example, if you pay a staff member a commission for sales made on a Saturday or Sunday, that payment now needs to be included in QE, even though it was earned outside ordinary hours. Payroll managers should be ready for higher reported earnings and superannuation obligations in these kinds of cases. 

Salary sacrifice amounts  

But only those that would have been QE if they hadn't been redirected into super. This stops salary sacrifice arrangements from accidentally shrinking the employer's SG obligation. An important distinction here: salary sacrifice amounts directed to non-super benefits — such as fringe benefits like a novated car lease or additional leave — are not included in QE. It's only the amounts sacrificed specifically to superannuation that get added back. You can find the full breakdown on the ATO's qualifying earnings page. 
 

Payments to "expanded definition" employees 

This covers workers the law treats as employees for SG purposes, even though they might not be traditional employees — independent contractors paid mainly for their labour, performing artists, sportspersons, and certain statutory office holders. 
 

A few common payment types sit outside QE: 

Overtime pay is excluded (unless the payment happens to fall into another QE category, like a commission). Expense allowances where the employee is genuinely expected to spend the full amount doing their job, such as a tool allowance, aren't QE either. Paid parental leave is out, whether it's government-funded or employer-funded, even if your enterprise agreement says super should be paid on all leave. Workers' compensation payments for periods of incapacity also fall outside QE. 

In more complex cases, some payments may be a mix of qualifying and non-qualifying components. For example, if an allowance or bonus is partly for ordinary hours (which would qualify) and partly for overtime (which would not), you should split the payment and only include the qualifying portion in QE. The same applies if a lump sum covers multiple work types — carefully separate and include only the eligible part. When in doubt, refer to the specific guidance from the ATO or get advice to make sure your reporting is correct. 

One thing to watch: some payments may fit into more than one QE category. A commission that also qualifies as OTE, for instance. In those cases, you only count it once — no double-dipping. 

The process itself isn't complicated once you know what goes in and what stays out. Here's the practical flow for each pay run: 

Start with the employee's OTE for the period — their base pay for ordinary hours, relevant leave, applicable allowances, and any bonuses or lump sums tied to ordinary time. 

Then layer on any commissions from the pay run. Remember, all of them now count regardless of when the underlying work was performed. 

If the employee has a salary sacrifice arrangement to super, add back whatever they sacrificed that would otherwise have been QE. (Don't add back amounts sacrificed to non-super fringe benefits.) 

For contractors paid mainly for their labour (or other expanded-definition workers), include their relevant payments. 

Scan for overlaps — if a payment fits multiple categories, count it only once. 

Multiply the total by 12% (the SG rate from 1 July 2026), and that's your super liability for the period. 

SG = Total QE × 12% 

One more thing: the maximum contribution base (MCB) still caps your obligation, but from 1 July 2026 it shifts from a quarterly to an annual calculation. Once an employee's cumulative earnings hit the annual cap, you're off the hook for further SG contributions that year. Make sure your system is set up to track this across the full financial year rather than quarter by quarter. 

As you prepare for this shift, it's worth reconciling your current year-to-date MCB tracking processes and historical payroll data to make sure all figures are accurate. Review and adjust any system rules or reporting dashboards that were previously based on quarterly limits, and run test pay cycles to confirm your software correctly detects when an employee reaches the annual cap. Regularly checking your MCB calculations against your payroll reports can help catch errors early, and documenting any related changes or exceptions will make future reviews much easier. 

A Quick Example 

Let's say you've got an employee — call her Sarah — who works full-time in sales. In a fortnightly pay cycle, her payslip looks like this: 

Sarah's QE: $4,200 + $800 + $1,500 = $6,500 

Super owed: $6,500 × 12% = $780 

Overtime and tool allowance aren't factored in. The commission is fully captured even though some of those sales happened on a Saturday. 

The Commission Change Is the Big One 

For most businesses, QE and OTE will produce the same number. The meaningful shift is commissions. 

If you've got employees earning commissions for work done outside ordinary hours — and you haven't been paying super on those amounts — that will change. Their QE will be higher than their OTE was, which means a bump in the SG you owe. 

It's worth reviewing your commission structures now to understand the financial impact before July. 

Some businesses are required to pay super at a rate above the 12% SG minimum — whether through an enterprise agreement, an award, or a contractual arrangement with employees. If that's you, it's important to understand how QE interacts with those obligations. 

QE sets the earnings base for the minimum SG calculation. But your award or agreement may require super on a broader set of payments (for example, on overtime or certain allowances that aren't part of QE), or at a higher percentage. In those cases, you still need to meet the terms of your industrial instrument — QE doesn't override or reduce those obligations. Think of QE as the floor. Your agreement may set a higher bar, and you'll need to continue meeting it. 

If you're unsure whether your above-minimum super obligations are affected by the move to QE, it's worth getting specific advice from your adviser or checking the relevant award provisions. Getting this right now avoids surprises when Payday Super goes live. 

Currently, you report either OTE or the super liability (or both) through STP. From 1 July 2026, you'll need to report both QE and the super liability for every eligible employee, every pay cycle. The ATO will use this data to monitor compliance in near real time — comparing what you've reported through STP with what super funds are actually receiving. 

There's a grace period: STP submissions that are missing QE or super liability data won't be rejected until 1 July 2027. But that 12-month window is there for transition, not procrastination. Getting your reporting right early means fewer headaches down the track. 

Talk to your payroll software provider about when their STP update for QE will land. Most major providers are working on this now, but timelines vary. 

Use this super checklist to ensure your payroll is ready before 1 July 2026. 

• Map your pay categories

Go through every pay type in your system and determine whether each falls inside or outside QE. Commissions and contractor payments are the ones most likely to trip people up. 

• Confirm your software is ready

Your payroll provider should be updating their product to handle QE calculations and the new STP fields. Chase them if you haven't heard anything yet — and plan time to test the configuration before go-live. 

• Check salary sacrifice setups

Make sure your system adds back sacrificed amounts correctly when it calculates QE — but only amounts sacrificed to super, not to fringe benefits. This is easy to get wrong if it's not configured properly. 

• Review contractor arrangements

If you use independent contractors who are mainly paid for their labour, they may be caught by the expanded employee definition for SG purposes. Their payments would then be included in QE. "Mainly paid for their labour" means the contractor is paid more for their personal effort and skills than for providing materials, equipment, or other results. As a general rule, based on ATO guidance, if more than 50% of the contract amount is for the individual's labour, they are considered to be mainly paid for their labour. Assess each contractor agreement carefully, and if you're unsure, refer to the current ATO guidance or seek professional advice to determine their status. 

• Don't ignore your awards and agreements

Some industrial instruments require superannuation amounts that go beyond the minimum QE-based SG — for example, super on overtime or certain allowances, or a rate above 12%. QE is the floor, not necessarily the ceiling. Review your obligations to make sure you're meeting both the new QE minimum and any additional requirements. 

• Keep an eye on the annual MCB

From 1 July 2026, the maximum contribution base is calculated on a yearly basis rather than quarterly. Your payroll system needs to track cumulative earnings across the full financial year to correctly identify when an employee hits the cap. 

Our payroll software is being updated to support QE calculations, the new STP reporting fields, and automated superannuation contributions aligned to each pay cycle. The goal is to take the guesswork out of compliance so you can focus on running your business. 

When reviewing payroll solutions or updates, payroll managers should look for key features to support Payday Super compliance. These include: accurate QE calculation, annual MCB tracking (not just quarterly limits), real-time STP reporting fields for QE and super liability, automated alerts when an employee approaches the annual MCB cap, salary sacrifice handling that correctly adds back only super-directed sacrificed amounts, and flexible configuration for any above-minimum requirements from awards or agreements. Asking your software provider about these features will help ensure you're well prepared for the changes. 

For more on getting ready for Payday Super, check out the other posts in this series or reach out to our team directly. 

This is general information only, current as of February 2026. It's not financial, legal, or tax advice. For the official guidance, head to ato.gov.au/paydaysuper, and talk to a qualified adviser about your specific situation.