Australian Payroll Glossary

Why payroll language matters

Payroll is one of the few back-office areas where a misunderstood term can become a legal problem. If you're not sure whether "OTE" includes overtime, or what "casual loading" is actually compensating for, you can underpay someone without ever intending to. This glossary covers the terms Australian employers meet most often. Where a number or rate is involved, always check the current figure with the ATO or the Fair Work Ombudsman — rates change, definitions rarely do.

Pay and entitlements

Modern Award

An industry- or occupation-based legal instrument that sets minimum pay rates, allowances, penalty rates and conditions for covered employees. Most Australian employees are covered by one. Your award's current rates are published by the Fair Work Commission and typically change each financial year — never rely on last year's schedule.

NES (National Employment Standards)

The set of minimum entitlements — including leave, notice of termination and maximum weekly hours — that apply to all employees in the national system, regardless of award or contract. A contract can add to the NES but never sit below it.

Casual loading

A percentage added to a casual employee's base rate to compensate for entitlements they don't receive, such as paid leave. The current loading is set by the relevant award or agreement.

Leave loading

An extra amount paid on top of annual leave under many awards. Whether it applies, and at what rate, depends on your award.

Junior rate

A reduced minimum rate for employees under a certain age, expressed as a percentage of the adult rate in the relevant award.

Penalty rate

A higher rate payable for work at less sociable times — evenings, weekends, public holidays — as specified in the award or agreement.

RDO (Rostered Day Off)

A paid day off accrued by working slightly longer ordinary hours across a cycle. Common in construction and manufacturing awards.

Tax and reporting

PAYG withholding

Pay As You Go withholding — the tax you deduct from employees' wages and remit to the ATO. Withholding amounts come from the ATO's current tax tables, not from memory or old spreadsheets.

STP (Single Touch Payroll)

The ATO's digital reporting regime: your payroll software reports salary, tax and super information to the ATO each time you run a pay. It's mandatory for employers, and it means the ATO sees payroll discrepancies quickly.

TFN (Tax File Number)

An employee's personal tax identifier. New starters provide a TFN declaration; without one, you must withhold at the top rate under ATO rules.

HELP/HECS debt

A study loan repaid through extra withholding once an employee's income passes the ATO's current repayment threshold. The employee flags it on their TFN declaration; your software handles the rest.

FBT (Fringe Benefits Tax)

Tax an employer pays on non-cash benefits provided to employees — cars, entertainment, some allowances. It runs on its own tax year and its own return.

BAS and IAS

The Business Activity Statement and Instalment Activity Statement — the forms through which you report and pay GST, PAYG withholding and instalments to the ATO on the cycle it sets for your business.

Superannuation

OTE (Ordinary Time Earnings)

The earnings base on which super guarantee is calculated — generally what an employee earns for ordinary hours, including some loadings and allowances but excluding most overtime. Misclassifying OTE is one of the most common causes of super underpayment; the ATO publishes a detailed checklist of what's in and out.

Super guarantee (SG)

The compulsory super contribution employers must pay on eligible earnings, at the rate the ATO currently prescribes, by the deadlines it sets. Under the payday super reforms, contributions move to alignment with each pay run rather than quarterly — check the ATO for the current rules that apply to you.

Underpayment

Any shortfall against award, NES or super obligations. Deliberate underpayment carries serious penalties, but most underpayments are accidental — a stale rate, a misread classification. The fix is systemised payroll with scheduled rate reviews, which is part of what a connected back office is for.

Keeping this practical

Terminology is only step one. Payroll obligations sit across the ATO, the Fair Work system and your super fund, and the numbers behind these terms change regularly. If payroll currently lives in one person's head, that's a fragility worth addressing — see founder dependency for why. This page is general information; for decisions about your specific employees, get advice from a registered professional.