What Is OTE? On-Target Earnings Explained
What is OTE? OTE means ordinary time earnings, the pay an employee earns for their ordinary hours of work, and it is the base on which the employer calculates the super guarantee. In Australia, super is 12% of ordinary time earnings for 2026-27, so OTE decides how much super you receive.
- OTE covers pay for ordinary hours, including most allowances and loadings, and it is the base for the 12% super guarantee in 2026-27.
- Overtime payments are generally not part of OTE, so extra hours do not usually lift your super.
- In sales jobs, OTE can also mean on-target earnings, which is a different meaning, so read the job ad carefully.
- Check your payslip for super paid on the correct amount, and ask the ATO or Fair Work Ombudsman if it looks wrong.
What is OTE and how it works
- Ordinary time earnings is what you earn for ordinary hours, including pay for hours worked, many allowances, commissions and bonuses that relate to your ordinary work.
- Your employer applies the super guarantee rate to your OTE each pay period. For 2026-27 that rate is 12%.
- Overtime hours are usually excluded, so a week with lots of overtime does not automatically produce a higher super payment.
- Under payday super, which starts 1 July 2026, super must reach your fund within 7 business days of payday.
- A maximum super contribution base applies, which is $270,830 per year for 2026-27, and super is not required on earnings above it.
- Check the ATO guidance for items that are or are not OTE, since treatment can differ for allowances, bonuses and leave payments.
Examples of what is OTE in practice
- A labourer paid by the hour for a 38-hour week has OTE equal to that pay, and super is calculated on it.
- A warehouse worker earns the same base pay plus overtime. Super is worked out on the ordinary-time pay and generally not on the overtime.
- A cleaner receives a regular allowance for a duty the award attaches to ordinary hours, which the employer must check with the ATO guidance for OTE.
- A sales employee has a job ad quoting OTE as on-target earnings, which is a performance target and not the same as the super base.
- A casual earns the 25% loading as part of the hourly rate, and super is worked out on their ordinary earnings.
What is OTE: key rules and numbers
| Item | What applies |
|---|---|
| Super guarantee | 12% of ordinary time earnings for 2026-27. |
| Payday super | From 1 July 2026, super must reach the fund within 7 business days of payday. |
| Maximum super contribution base | $270,830 per year, giving a maximum super guarantee amount of $32,499.60. |
| Concessional cap | $32,500 for 2026-27, including salary-sacrificed super and employer contributions. |
| National minimum wage | $26.44 per hour from the first full pay period on or after 1 July 2026. |
Related terms
- Remuneration: the full package of pay and benefits. See what is remuneration.
- Salary vs wages: a fixed annual amount versus pay by the hour. See salary vs wages.
- Casual loading: an extra percentage paid to casuals in place of leave. See casual loading.
- Super guarantee: the compulsory employer contribution to a super fund, worked out from OTE.
What is OTE? FAQ
What is OTE in a job ad?
In sales and commission roles, OTE often means on-target earnings, the base salary plus the commission or bonus you would earn if you meet your targets. That is different from ordinary time earnings. Ask the employer which meaning applies and how much of the package is guaranteed.
Is overtime included in OTE?
Generally no. Overtime payments are not usually counted in ordinary time earnings, so super is not normally calculated on them. Other items, such as certain allowances and bonuses, can be included. Check the ATO guidance for your situation, or ask a registered tax professional.
How do I check my super is calculated on the right amount?
Compare your payslip with your pay rate and ordinary hours. Multiply your ordinary earnings by 12% for 2026-27 and check the amount against your fund. If it looks wrong, ask your employer first, then contact the ATO or the Fair Work Infoline on 13 13 94.
This is general information, not legal, tax or financial advice, so check the Fair Work Ombudsman, the ATO or an employment lawyer for your situation. For more, read our guide to casual vs part-time work, or register with TQN Personnel for work.