Effective from 1 July 2026, employers will be required to pay super guarantee (SG) contributions at the same time as wages are paid — this is the Payday Super reform. A key part of this change is a new, unified concept called qualifying earnings (QE), which replaces the previously separate earnings bases used to calculate SG and the super guarantee charge (SGC).
Important: Some regulations and law for Payday Super are still being considered by Parliament. Pace Advisory will keep clients updated as legislation is finalised.
What is Qualifying Earnings?
Qualifying earnings is the single base used from 1 July 2026 to calculate both the SG contribution amount and the SGC. For most employers, this will not change the dollar amount of super you currently pay — but it does change the framework for calculating it.
What’s Included in Qualifying Earnings?
QE broadly includes:
- Ordinary time earnings (OTE) — payments for ordinary hours of work, including certain leave, allowances, bonuses and lump sums.
- All commissions — including those earned entirely outside ordinary hours (this is an expansion under Payday Super).
- Salary sacrificed amounts that would have been QE if paid directly to the employee.
- Payments to workers under the expanded definition of employee, such as independent contractors paid mainly for their labour.
Key Inclusions at a Glance
| Ordinary time earnings | Ordinary hours, casual loading, shift penalties, piece rates, public holidays, flexi time, RDOs, allowances (task-based) |
| Paid leave | Annual leave, sick/carer’s leave, long service leave (non-portable), family & domestic violence leave, study leave, gardening leave |
| Bonuses & commissions | All commissions, performance bonuses, Christmas bonuses, sign-on bonuses, referral bonuses, return-to-work bonuses |
| Director’s fees | Both working and non-working directors |
| Payment in lieu of notice | Yes — included in QE for all termination reasons |
| Salary sacrifice to super | Yes — if the sacrificed amount would otherwise be QE |
What’s Excluded from Qualifying Earnings?
The following payments are not qualifying earnings:
- Overtime (where ordinary hours are clearly identified in an award or agreement)
- Employer paid parental leave and Government paid parental leave
- Unused annual leave, long service leave and personal leave on termination
- Redundancy pay, genuine redundancy amounts above the tax-free limit, golden handshakes and other termination payments
- Community service leave, jury duty leave, defence reserve leave
- Workers’ compensation payments where the employee is not required to work
- Expense allowances expected to be fully spent by the employee
Pace Tip: If you currently pay commission only to sales staff or reward project work done entirely outside ordinary hours, note that commissions are now always qualifying earnings. This may increase SG obligations for some employers.
Salary Sacrifice Arrangements
Where an employee salary sacrifices into superannuation, the sacrificed amount must be included in their qualifying earnings for SG calculation purposes — provided the underlying payment would have been QE if paid directly. Salary sacrificed to other benefits (e.g. novated leases, laptops) is not included.
Contractor Arrangements
Independent contractors paid mainly for their labour remain employees for SG purposes. Their payments are qualifying earnings and super must be paid from 1 July 2026 on payday, just like regular employees.
