The ATO's draft ruling on the meaning of ordinary time earnings will be a nightmare for employers and does no favours for employees.

At Agitate! we have highlighted the negative impact the Fair Work Bill will have on business and employment (click here and here).  In short, combined with the economic downturn, it will make a bad situation significantly worse.

Unrelated to the Fair Work Bill, but providing yet another example of regulation which will act to the detriment of business and employment, the Australian Tax Office has issued a ridiculous draft ruling as to the meaning of ordinary time earnings (OTE) for the purpose of the Superannuation Guarantee contribution.

The existing ruling provides that overtime is not included in OTE (and therefore not subject to superannuation payments) because it is: “Paid for work performed outside ordinary hours of work.  It makes no difference how often the employee works overtime.”

The draft ruling contains a significant departure from this.  It states that for the purposes of OTE, an employee’s “ordinary hours of work” are the hours of work that it is usual for the employee to work.  Paragraph 19 of the Ruling sets out that where it is evident from the regular work pattern of an employee that the span of hours actually worked are consistently different to the standard working hours in an Award or agreement, then that employee’s regular work pattern will establish their OTE – even if paid at overtime or penalty rates (or for night or weekend shifts).

To read the full story on the danger this ruling poses to the employment and wages of working Australians, click here.