Payday Super: What Employers Need to Know

The Australian Government is introducing a new requirement for employers to pay their employees' superannuation at the same time as their salary and wages. 

Starting from 1 July 2026, this reform, known as "Payday Super", aims to improve the retirement incomes of millions of Australians. 

Let's take a closer look at what this means for employers and how to prepare for the upcoming changes.

This change is part of the government's efforts to ensure Australians earn more, keep more of what they earn, and retire with more.

The Australian Taxation Office (ATO) estimates that $3.6 billion worth of super went unpaid in 2020–21.

By implementing Payday Super, the government aims to strengthen Australia's superannuation system and help deliver a more dignified retirement to more Australian workers.

• Updated super guarantee charge framework: This framework will ensure employees are fully compensated for any delay in receiving their super, incentivise employers to catch up on any missed payments quickly, and increase the severity of consequences for employers that deliberately or repeatedly fail to meet their obligations.
• Seven-day contribution window: Businesses will become liable for the updated superannuation guarantee charge if their employees' superannuation fund does not receive super contributions within seven days of payday. This allows time for payment processing and swift action against non-compliant employers.
• Revised choice of fund rules: These rules will make it easier for employees to nominate their existing super fund when starting a new job, reducing unintended duplicate accounts and providing employers with more timely and accurate details.

Non-compliance may result in penalties under the updated super guarantee charge framework.

To prepare for Payday Super, employers should:

• Review current payroll processes and systems to accommodate the new requirements
• Communicate the upcoming changes to employees
• Stay informed on legislative updates leading up to the implementation date

Adapting to these changes may require some initial effort, but the long-term benefits for employees and the superannuation system as a whole are significant.

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• More timely receipt of super contributions, aligning with their regular pay cycle
• Compensation for any delayed payments under the updated super guarantee charge framework
• Easier process to keep their existing super fund when changing jobs, reducing the likelihood of unintended duplicate accounts
• Potential increase in retirement balances due to more frequent contributions and compounding interest

To illustrate the potential impact, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement under the Payday Super system.

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• Review current payroll processes: Assess your current payroll systems and processes to identify any necessary changes to accommodate the new requirements. This may involve updating software, adjusting payment schedules, and training payroll staff.
• Ensure system compatibility: Work with your payroll software provider to ensure your systems can handle the increased frequency of superannuation payments and any associated reporting requirements.
• Communicate with employees: Keep your employees informed about the upcoming changes and how they may be affected. Provide clear information about any actions they need to take, such as nominating their preferred superannuation fund.
• Stay informed: Monitor legislative updates and guidance from the ATO and other relevant authorities to ensure you remain compliant with the new requirements.
  
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• Starting from 1 July 2026, Payday Super requires employers to pay employees' superannuation at the same time as their salary and wages.
• The updated super guarantee charge framework will ensure employees are compensated for delayed payments and increase consequences for non-compliant employers.
• Employers will have a seven-day window from payday to make super contributions to their employees' funds.
• Revised choice of fund rules will make it easier for employees to nominate their existing super fund when starting a new job.
• Employers should review their payroll processes, ensure system compatibility, communicate with employees, and stay informed on legislative updates to prepare for Payday Super.

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To learn more about Payday Super and how to automate your superannuation processes, watch our latest webinar: Payday Super & Super Automation.