In 2023, the Australian Government announced that from 1 July 2026, employers will be mandated to pay superannuation contributions concurrently with their employees’ salary and wages payments.
This reform, known as “payday super”, will replace the existing quarterly superannuation payment cycle with a process requiring contributions to be made within seven days of each pay cycle, whether that be weekly, fortnightly, or monthly.
Impact on Employees:
From the effective date, employers must align superannuation payments with each payroll cycle. This measure will improve transparency and make it easier for employees to track their superannuation contributions, ultimately enhancing retirement savings.
It is anticipated that this change will particularly benefit casual employees who, under the current system, may miss out on regular super payments. Modelling suggests a 25-year-old median income earner, who currently receives superannuation quarterly but wages fortnightly, could accumulate approximately $6,000 more by retirement—an increase of around 1.5%.
Impact on Employers:
The payday superannuation legislation is still in draft form, with consultation closing in April 2025 to obtain feedback from Australian business owners: Consultation on Payday Super Draft Legislation
Whilst the shift to synchronising super payments with payroll cycles may seem straightforward, it is expected to have considerable implications on administrative processes and cash flow management.
Considerations for Your Business Include:
- Increased Administrative Responsibilities
More frequent superannuation payments will mean a greater volume of transactions to process, potentially increasing the administrative burden and impacting resources, particularly for small businesses. - Seven-Day Payment Window Concerns
Industry groups have expressed concerns regarding the practicality of meeting the seven-day timeframe, citing challenges such as banking delays and clearing house processing times. - Potential for Late Payment Penalties
Proposed legislation includes penalties for late superannuation payments, regardless of whether delays are within an employer’s control. This may expose employers to unfair penalties due to external issues. - Closure of the Small Business Superannuation Clearing House
The Government plans to close the Small Business Superannuation Clearing House (SBSCH) from 1 July 2026. This free service has been instrumental in simplifying super payments for small employers and its removal has been met with concern. More information is available here: ATO – Small Business Superannuation Clearing House
With the current Government committed to introducing payday super, businesses should proactively review their payroll systems and processes to ensure compliance with the new requirements.
Our team is available to assist you in preparing your payroll systems for payday superannuation and to provide guidance on adapting your business processes accordingly.
