Is superannuation required to be paid on rest breaks for overtime work as per clause 40.10 of the Manufacturing and Associated Industries and Occupations Award 2010?
Clause 40.10 of the Manufacturing and Associated Industries and Occupations Award 2010 (the Manufacturing Award) states:
40.10 Rest break
(a) An employee working overtime must be allowed a rest break of 20 minutes without deduction of pay after each four hours of overtime worked if the employee is to continue work after the rest break.
(b) Where a day worker is required to work overtime on a Saturday, Sunday or public holiday or on a rostered day off, the first rest break must be paid at the employee’s ordinary time rate.
(c) Where overtime is to be worked immediately after the completion of ordinary hours on a day or shift and the period of overtime is to be more than one and a half hours, an employee, before starting the overtime, is entitled to a rest break of 20 minutes to be paid at the employee’s ordinary time rate.
(d) An employer and employee may agree to any variation of clause 40.10 to meet the circumstances of the work in hand provided that the employer is not required to make any payment in excess of or less than what would otherwise be required under clause 40.10.
When paid rest breaks form part of overtime (as the above clause illustrates), superannuation is not payable on rest break payments because the rest break payments do not constitute ‘ordinary time earnings’ (OTE).
Superannuation is paid on OTE, as defined by the ATO Superannuation Guarantee Ruling SGR 2009/02. Under this ruling the payment of rest breaks during overtime work is not regarded as OTE as they compensate an employee for working overtime rather than their ordinary hours. As a result, paid rest breaks during overtime in accordance with clause 40.10 of the Manufacturing Award do not form part of the employee’s OTE for the purposes of the payment of superannuation.
Clause 40.10(b)of the Manufacturing Award states that the first rest break in a series of rest breaks will be payable at the employee’s ordinary time rate. However, the rest break payment is still for performing overtime work (even though the first rest break may not be paid at overtime penalties) and therefore does not form part of the employee’s OTE for the purposes of paying superannuation. The same principle also applies to clause 40.10(c) of the Manufacturing Award as the rest break is taken at the "completion of ordinary hours".
