What does OTE mean in a salary?

In a job ad, OTE means on-target earnings, the base salary plus the commission you earn at target. In super, it means ordinary time earnings. What each means for your pay.

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In a salary, OTE usually stands for on-target earnings. It is your base salary plus the commission or bonus you would earn if you hit your targets, and you will mostly see it in sales roles. In Australian payroll and super, OTE also stands for ordinary time earnings, the ATO's term for what you are paid for your ordinary hours of work.

Commission counts towards the earnings super is worked out on, so in a sales role the variable part of your OTE lifts your super too.

What does OTE mean in a job ad?

An offer of "$90,000 base, $140,000 OTE" means the base salary is $90,000 and the employer expects someone who hits target to earn another $50,000 in commission or bonus. Only the base is a fixed salary. The rest depends on the commission plan and on your results.

Some offers describe the mix as a split, such as 70/30, meaning 70% of OTE is base and 30% is variable. In the example above, the base is about 64% of OTE.

How do you work out what an OTE salary pays?

Start with the base, then add the variable part in proportion to how much of target you hit, if that is how your plan pays. On $90,000 base with $50,000 at target, hitting 80% of target earns $40,000, so $130,000 for the year. Hitting 120% earns $60,000, so $150,000.

Your plan may not pay in a straight line. Some plans pay nothing below a threshold, some pay a higher rate above target and some cap what you can earn. The plan document sets the rules, so read it before comparing two offers on their OTE.

What should you ask before accepting an OTE offer?

  • How much of the OTE is base, and is super paid on top of it or included in it?
  • What is the target, and how was it set?
  • How many people in the team hit target last year?
  • When is commission paid, and can any of it be clawed back if a client cancels?
  • What happens to commission owed while you are on leave, or if you resign before it is paid?

What is ordinary time earnings?

The ATO describes ordinary time earnings as a subset of the pre-tax payments an employer makes to employees for their ordinary hours of work. The term is defined in the Superannuation Guarantee (Administration) Act 1992.

Your ordinary hours are the ones your award or agreement specifies. If none are specified, they are your regular or customary hours.

The ATO's lists show that commission, performance bonuses, Christmas bonuses, sign-on bonuses, casual loading and shift penalties all count as ordinary time earnings. Overtime doesn't, as long as your ordinary hours are clearly identified. Annual leave loading counts towards super unless it is clearly linked to lost overtime.

How is super worked out on an OTE salary?

For earnings paid up to 30 June 2026, the super guarantee was 12% of ordinary time earnings. Payday Super started on 1 July 2026, and the super guarantee is now 12% of qualifying earnings, a new term that brings together ordinary time earnings and other payments.

Qualifying earnings include ordinary time earnings, all commissions, salary sacrifice amounts and some payments to contractors paid mainly for their labour. The ATO says that for most employers the change doesn't alter the amount of super paid. For sales roles, the addition that matters is commission for work done entirely outside ordinary hours, which now attracts super.

Super must now reach your fund within 7 business days after payday, with some exceptions such as for new employees. On $90,000 base and $50,000 commission, the super guarantee is 12% of $140,000, which is $16,800 for the year. The ATO's maximum contribution base for 2026-27 is $270,830. Once your qualifying earnings reach it, your employer can stop paying the minimum super guarantee for the rest of that financial year.

Does commission count for leave, redundancy and unfair dismissal?

Under the National Employment Standards, annual leave, sick leave and redundancy pay are worked out on your base pay rate. The Fair Work Ombudsman says base pay leaves out bonuses and incentive-based payments. Check your contract, and any award or agreement, for how commission is handled while you are on leave.

The high income threshold for unfair dismissal is $190,100 for dismissals on or after 1 July 2026. The Fair Work Commission says earnings for the threshold don't include payments that can't be worked out in advance, such as commissions, incentive-based payments and bonuses. So on a $150,000 base with $100,000 at target, your earnings for the threshold are the $150,000, under the limit. Our guide to unfair dismissal payouts covers who can claim.

This is general information, not legal or financial advice.

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