Originally prepared July 2026
Qualifying Earnings: The New Way Super Is Calculated
Now that Payday Super is live, there's a second change sitting underneath it that's easy to miss: how the super amount itself gets calculated. From 1 July 2026, employers calculate super using a new measure called Qualifying Earnings (QE) — not the old Ordinary Time Earnings (OTE).
What's different
For most employees on straightforward pay arrangements, QE and OTE come out very similar — this isn't a dramatic overhaul for the average payslip. But QE is a broader concept that folds in a few things OTE didn't always capture cleanly:
All of OTE — base pay for ordinary hours, most types of paid leave, relevant allowances, and bonuses or lump sums tied to ordinary time work
All commissions paid to an employee, including commissions for work done entirely outside ordinary hours (this is genuinely new — commissions weren't always OTE before)
Salary sacrifice amounts that would have counted as QE if the employee hadn't sacrificed them to super
Payments to some contractors who fall under the expanded "employee" definition for super purposes
What's still excluded: overtime pay, most reimbursements, paid parental leave, and most termination payments remain outside the QE calculation, same as they were outside OTE.
Why the change exists
Under the old quarterly system, OTE was calculated once a quarter — there was time to reconcile odd payments like commissions or leave loadings. Under Payday Super, contributions need to be calculated and paid every pay cycle, so the ATO needed one consistent, unambiguous definition that works cleanly on a per-pay-cycle basis. QE is that definition — think of it as OTE, tidied up and made fit for frequent calculation.
What this means for you
The minimum super guarantee is 12% of an employee's Qualifying Earnings for the pay period. If your payroll software is up to date (Xero and other major platforms have already built QE into their Payday Super calculations), this happens automatically — you don't need to manually reclassify each payment type.
Where it's worth double-checking: if you pay commissions, especially commissions tied to work outside ordinary hours, or if you have employees with salary sacrifice arrangements, it's worth confirming your payroll setup is correctly capturing these under the new QE rules rather than the old OTE ones.
This article is general information for Slade Bookkeeping clients and doesn't account for your specific payroll arrangements. If you'd like us to check how Qualifying Earnings applies to your commission structures or salary sacrifice arrangements, talk to us directly.
Sources: Australian Taxation Office — Explaining qualifying earnings; Australian Taxation Office — What payments are qualifying earnings.