How Payday Super Could Affect Employers and Employees
Superannuation is set for a major shake-up. The proposed “payday super” reforms from the Labor government would require employers to pay superannuation contributions within seven calendar days of each payday, starting 1 July 2026.
With draft legislation now open for consultation, it’s worth understanding how these changes could impact you.
Why the Change?
According to the ATO, an estimated $5.2 billion in super went unpaid in 2021–2022. Payday super aims to:
- Improve the timeliness and visibility of super payments
- Reduce unpaid super
- Boost retirement savings
For example, a 25-year-old on a median income, currently receiving quarterly super payments, could be around $6,000 better off at retirement if contributions were made on payday.
What Employers Need to Know
- New Payment Deadlines
From 1 July 2026, super must be paid within 7 calendar days of each payday—whether you pay weekly, fortnightly, or monthly. - New Terminology: “Qualifying Earnings” (QE)
This replaces “ordinary time earnings base” and will be used to calculate super contributions and shortfall charges. - SBSCH Closure
The ATO’s Small Business Superannuation Clearing House will close from 1 July 2026. Employers using it must switch to compatible payroll software. - Extended Timeframes for Exceptions
Some flexibility will apply to new employees, out-of-cycle payments, and events like natural disasters. - Redesigned Penalties
The Super Guarantee Charge (SGC) will include:
- Notional earnings (interest)
- Administrative uplifts
- Penalties for fund choice non-compliance
Both on-time and late contributions will remain tax-deductible.
What Employees Can Expect
- Faster growth: More frequent contributions mean your super can start earning compound interest sooner.
- Greater visibility: Easier tracking of whether your employer is up to date.
- Stronger protections: Enhanced enforcement and penalties for unpaid super.
- Faster processing: Funds will need to allocate contributions within 3 business days (down from 20).
What’s Next?
The draft laws are open for public comment until 11 April 2025, with final legislation dependent on the 3 May 2025 federal election.
Employers should start preparing by:
- Reviewing payroll processes
- Considering cash flow impacts
- Planning for alternatives to the SBSCH
Stay updated as the rules may evolve following consultation and the election.
📄 Read the draft legislation: treasury.gov.au/consultation/c2025-627396
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.