The way superannuation is paid may be about to undergo a significant transformation. The Labor government’s proposed “payday super” reforms would require employers to pay employees’ superannuation contributions within seven calendar days of every payday. Draft laws have been released for comment, and payday super is intended to apply from 1 July 2026, it’s important to understand what this could mean for you.
According to the ATO, while most employers do the right thing by their employees, an estimated $5.2 billion in super went unpaid in 2021–2022. The change to payday super is designed to improve the management of super payments and simplify payroll arrangements, reduce unpaid super incidents, and ultimately enhance retirement savings for Australians.
For employers, transitioning to payday super represents a shift in administrative processes. Some key considerations:
- From 1 July 2026, you’d need to ensure super contributions reach your employees’ funds within seven calendar days of their payday, regardless of whether you pay weekly, fortnightly or monthly.
- The draft legislation introduces “qualifying earnings” (QE) which equates to the current “ordinary time earnings base”. QE will be used to calculate both super contributions and any shortfall charges. Any shortfall charges are currently calculated using the larger salary and wages figure.
- The ATO’s Small Business Superannuation Clearing House (SBSCH) would close from 1 July 2026, so employers who use it would need to transition to suitable payroll software.
- The legislation includes some flexibility for paying super to new employees, out-of-cycle payments and exceptional circumstances like natural disasters.
- The superannuation guarantee charge (SGC) would be redesigned to include components such as notional earnings (interest on unpaid super), administrative uplifts, and choice loadings for non-compliance with fund choice rules. Importantly, both on-time and late contributions would be tax-deductible, potentially offering some financial relief to employers.
For employees, payday super offers several potential benefits:
- Your super would be paid with each pay cycle rather than as infrequently as quarterly. This means your retirement savings may benefit from compound interest sooner.
- The alignment of super payments with your regular pay should make it easier to track whether your employer’s meeting their obligations.
- The new system includes stronger mechanisms to detect and address unpaid super, with employers facing increasing penalties for non-compliance.
- Super funds would have stricter time frames for processing contributions, with allocation deadlines reduced from 20 business days to just three business days.
The draft legislation was open for public comment until 11 April 2025, with introduction of final legislation dependent on the 3 May 2025 federal election outcome.
Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
