What is Payday Super?
“Payday Super” refers to a system where employers are required to pay their employees’ superannuation contributions at the same time as their salary or wages. In 2023, the Federal Government outlined plans to implement this system, requiring employers to simultaneously pay superannuation guarantee contributions when making ordinary time earnings payments—employees’ usual wages or salaries. From July 1, 2026, super must be paid on the same day as these payments, excluding extra payments such as on-call allowances or expense reimbursements that may be provided as part of their remuneration package. The actual payday can vary depending on the employer’s payment system, whether weekly, fortnightly or monthly.
Under these plans, employers will be liable to pay the super guarantee charge if an employee’s superannuation fund does not receive it in full and within seven calendar days of their payday. The charge compensates employees for any delay in receiving their super. The final amount will depend on the instance but will be higher than the amount of super that would have been paid to the employee. The charge will also increase the longer it takes for the employer to pay the super guarantee. The deadline for super funds to allocate or return contributions is also being reduced under the legislation to help employers and intermediaries quickly address errors.
Other changes in the Payday Super plans include decommissioning the Small Business Superannuation Clearing House. Employers affected by this move are expected to receive support to transition to an alternative system. Employers will also be required to report the employee’s ordinary time earnings and total super liability in Single Touch Payroll to enhance clarity around payments.
Payday Super legislation was to be designed during the second half of the 2024 calendar year before draft legislation could be released for consultation. It is unknown what effect the 2025 Federal Election may have on the legislation’s progress.
The reasons behind Payday Super legislation
The biggest issue the Albanese Government hoped to address with Payday Super is the long-term ramifications of unpaid and delayed employee superannuation payments. Both can reduce the amount of superannuation that an employee can access when they retire. It estimates that a 25-year-old median income earner may be 1.5% better off at retirement if their super is paid fortnightly instead of quarterly.
Payday payments may also help employees better track their employers’ superannuation payments and ensure they receive them. The Government expects the Australian Taxation Office to be better able to take swift action to rectify occurrences of unpaid superannuation.
The Federal Government also outlines benefits for employers. By making more frequent superannuation payments during the year, it expects payroll management to be a smoother process for employers, as fewer liabilities will build up on their accounting books.
How employers can prepare for legislative change?
Regardless of whether the Payday Super legislation passes in time for the new measures to commence from July 2026, employers may like to consider acting now to voluntarily make the change to more regular payments, if they do not already do so.
The reasons why employers may like to consider this move include:
- enhancing their reputation as an employer of choice, as making regular payments will increase super fund earnings for employees
- streamlining their superannuation guarantee payment process, making it easier to ensure super contributions have been paid
- avoiding financial penalties via the super guarantee charge when super payments have been inadvertently overlooked
- simplifying payroll systems, making the process more manageable, while also taking advantage of new features that upgrading payroll software can offer.
Employers may find switching their payment dates is an easy administrative process that is as simple as making a settings change in their payroll system. For some employers, however, it may be difficult to access the cash flow required to make more regular payments than is currently legislated. Seeking the advice of a business adviser, either independently or through your bank, may be beneficial to try to improve this access. If required, employers can also consult a business or tax lawyer to help guide them through the transition and keep them updated about developments.
Common problems to consider
While preparing for a change to superannuation payment dates, it can also be a good time to check that any super information held on file, including employee super fund details, is accurate.
Even if employers currently make payday payments, they may still be penalised under the Payday Super legislation if they do not pay the correct amount.
The proportion of an employee’s salary required to be paid as a super contribution has changed several times recently, and one more increase will occur in 2025. In the 2024-25 financial year, a super guarantee of 11.5% applies. From July 1, 2025, a super guarantee of 12% will apply. However, it is the last change under the current and proposed legislation that will occur.
It may also be worthwhile to check your employees’ superannuation fund details, such as the funds they have nominated and their account numbers, are correct. This may be an especially important task for employees recently hired, who may not have had those details immediately to hand when they were onboarded.
Remember, Payday Super is not yet law and legislation may change or may not pass at all. However, by taking steps to change away from quarterly payments now, those employers can be a step ahead and reap some benefits. If you decide not to proceed with a change now, it will be wise to stay informed about the legislation’s progress in case it does become mandatory in 2026.
Read more: How to Navigate Pay Transparency Laws
