How will Payday Super changes affect employers and employees?

The Federal Government's Payday Super legislation aims to create a fairer superannuation system for all Australians.

Currently, employers can decide to pay employees' superannuation guarantee (SG) entitlements at a minimum frequency of once a quarter.

From 1 July 2026, employers will be required to pay SG contributions at the same time as employees' salary and wages (or qualifying earnings), and they must be received by the super fund within seven business days.

This reform means almost nine million Australians will have their super paid sooner, according to the Super Members Council.

It will deliver an extra $7,700 by retirement on average as contributions will start earning compound investment returns sooner.

The changes will particularly benefit workers in lower-paid, casual and insecure jobs who are more likely to miss out when super is paid less frequently.

What does Payday Super mean for employers?

Some could face short-term challenges initially, according to industry super fund HESTA, but once set up it will mean stabilised cashflow and reduced super liability.

Employers face fines if super payments are not made in time, including the full due amount, plus a 60 percent penalty and daily compounding interest.

"If the ATO assesses your super guarantee charge and you still don't pay within 28 days, you get hit with an additional penalty of up to 50 percent of the outstanding amount," warns HESTA's General Manager of Finance and Procurement, Jenny Lang.

"The penalties and interest after assessment of super guarantee charges by the ATO are not tax-deductible, making every dollar of the fine a very expensive error.

"However, the government is indicating that the ATO will adopt an education approach during the initial transition period. Any enforcement action would be proportionate to the scale of the wrongdoing in the early stages."

Ms Lang recommended four 'golden rules' to help employers meet their requirements:

• Start documenting current super payment processes to identify areas requiring change.
• Review, update and provide assurance that current payroll systems can handle same-day super payment rules.
• Consider any impact on cash flows to enable meeting the new requirements.
• Consider staff training needs for how you calculate super including consideration of how you approach matters like the Maximum Super Cap, along with aforementioned potential changes to systems and processes.

How will employees benefit from Payday Super?

The power of compound interest will boost workers' super balances because their payments will be received sooner and more regularly.

"Australians miss out on a staggering $5.7 billion in retirement savings every year because of unpaid super," says HESTA's Policy and Advocacy Manager, Charlotte Ahearne.

"So reducing the timeframe for paying workers' super helps level the playing field for those employers doing the right thing and, most importantly, ensures that all workers get paid their fair entitlement.

"Research by Super Members' Council shows us that young, low-income women are the worst hit by unpaid super. So you can see it really matters to our members, who are around 80 percent women, but of course it's a win for all working Australians," she added.

"Treasury has estimated that a 25-year-old median income earner currently receiving their super on a quarterly basis could be around $6,000 better off at retirement just from being paid their super at the same time as their wages."

For more information on Payday Super, visit HESTA's dedicated online resource.

For more super support for you and your team, access HESTA's information hub.

• HESTA is APHA's Diamond Sponsor

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