Qualifying Earnings

What are Qualifying Earnings (QE)?

Qualifying earnings are the portion of an employee’s income that is used to calculate mandatory superannuation contributions and other entitlements. They represent the earnings that “qualify” for these calculations under Australian legislation, ensuring employees receive the correct contributions into their super funds.

What counts as Qualifying Earnings?

In Australia, qualifying earnings typically include an employee’s ordinary time earnings (OTE). This covers:

• Base salary or wages
• Commissions
• Shift loadings and penalties
• Allowances (e.g. on-call or site allowances)
• Paid leave (annual leave, sick leave, long service leave)

Certain payments do not count as qualifying earnings. For example, overtime outside of standard ordinary hours, reimbursements, and payments unrelated to hours worked (like redundancy payouts) may be excluded.

Why are Qualifying Earnings important?

Understanding qualifying earnings is essential for employers because:

• Superannuation compliance: Superannuation Guarantee (SG) contributions must be based on qualifying earnings.
• Fair Work compliance: Awards and Enterprise Agreements often reference OTE for entitlements.
• Accurate payroll: Misclassifying payments can lead to underpayments or overpayments, penalties, and the need for remediation.

Employer responsibilities

Employers must:

• Correctly identify what is included in qualifying earnings.
• Apply the correct Superannuation Guarantee rate (12% from 1 July 2025).
• Ensure payroll systems are updated when rules or rates change.
• Keep records that demonstrate compliance with ATO and Fair Work requirements.

Failing to calculate superannuation based on qualifying earnings can result in SG Charge penalties, audits, and back payments.

Employee perspective

For employees, qualifying earnings ensure that their super contributions reflect the income they actually earn in the course of ordinary work. This impacts long-term retirement savings, so correct calculations are essential.

How Microkeeper helps?

Microkeeper simplifies compliance by allowing you to:

• Configure payroll rules to automatically apply the correct Superannuation Guarantee rate on qualifying earnings.
• Link timesheets, rosters, and payroll so payments flow directly into super calculations.
• Generate audit-ready reports that show how contributions are calculated.
• Integrate with Beam for seamless superannuation processing, ensuring contributions are paid correctly and on time.

By managing payroll and superannuation in one unified system, Microkeeper reduces the risk of errors and ensures businesses remain compliant with legislation.

Key takeaway

Qualifying earnings are the foundation for calculating superannuation contributions in Australia. Employers must identify and include the right types of pay to remain compliant. With Microkeeper, this process is automated, accurate, and fully integrated into your workforce management system.