Preparing for the New Payday Super Legislation

Payday super is an upcoming requirement to pay employees their superannuation entitlements on the same day as their regular pay. The new legislation aims to improve retirement outcomes for Australian workers. 

It could require many employers to increase the number of superannuation payments they make from four a year to anywhere between 26 to 52 payments a year depending on their pay cycle. The new requirements are currently set to start in 2026, which means it’s time for employers to update their payroll software to lighten the workload. 

What is payday super? 

In Australia, employees are entitled to a Super Guarantee (SG). Under this scheme, employers are required by law to contribute a percentage of their employees' ordinary time earnings into an employee’s superannuation fund of choice.  

In the 2023-24 Federal Budget, the Australian government announced that employers will be required to make and report Superannuation Guarantee (SG) contributions at the same time they pay salary and wages. This will replace the current requirement to pay super quarterly.  

The Treasury’s Payday Super Factsheet outlines more information about the requirements, exceptions, and updated SG charges. For example, according to information available at the time of writing, every time that Ordinary Time Earnings (OTE) are paid, there will be a 7-day due date for contributions to arrive in the employees’ superannuation fund. This gives time for the funds to move through payroll systems and clearing houses. If the funds are late, the employer will be liable for the new SG charge. 

The proposed changes are due to take effect from July 1, 2026. This means that businesses that aren’t paying their employees’ contributions in alignment with their pay cycle will need to update their systems and processes. 

Why was payday super proposed? 

Australia’s superannuation was created to help working Australians have a secure retirement. The goal was to help people save for their retirement, reduce reliance on the Age Pension, and improve people’s standard of living when they finish work. It became compulsory for employers to pay in 1992 and has undergone a number of changes to create better outcomes for Australians. The latest iteration is the new payday super legislation. 

By making superannuation contributions more frequent, Australian workers have more potential to generate earnings and can retire with increased balances. Payday super is also being introduced as the Australian Tax Office (ATO) develops more sophisticated methods for identifying compliance breaches.  

According to the ATO’s annual report, Australian workers missed out on $5.2 billion of unpaid superannuation in 2023-24, up from $4.8 billion in the previous financial year. While the total amount increased, the percentage of super that went unpaid after recovery efforts dropped from 6.7% to 6.3% thanks to new measures for calculating unpaid super and increased compliance action that prevent employees from being short changed. 
 
Beyond maximising the value of employee superannuation, more frequent contributions have plenty of other benefits:  

• They make it easier for employees to monitor if their super entitlements are being met. 
• They encourage higher retirement savings and living standards in Australia. 
• Employees will be able to review their superannuation account transactions each pay cycle to check for non-compliance. 
• They reduce the risk of employers building up large superannuation liabilities which they may end up being unable to pay by the end of the quarter. 
• Non-payment and underpayment of superannuation is considered wage theft. The increased frequency will help employers avoid significant fines and penalties for non-compliance that can occur with quarterly contributions. 
• The Australian Tax Office will be able to match Single Touch Payroll (STP) data and superannuation fund reporting, gaining more visibility of SG contributions throughout Australia. 
• They enable the Australian Tax Office to identify unpaid superannuation earlier and take quick action. 

How will payday super changes affect employers? 

Many employers will need to adjust their payroll processes to adapt to the new payday super legislation.  

Employers paying super on a quarterly basis may struggle with the additional workload. The increased frequency of payments could also be challenging for those with high employee turnover, shift-based workers, and short pay cycles. Businesses with variable cash flow could also find them challenging to meet, as less frequent payments give them more time to build up their funds. 

As payments are made more often, payroll systems need to be able to feedback payment issues in real-time so that every transaction is checked. 

Without updating their technology, many payroll departments would need more employees to handle the increased workload. However, with a seamless payroll system in place, paying super funds with each payday can help employers monitor their cashflow, stay on top of their obligations, and avoid fines for non-compliance. 

Preparing for payday super 

From July 1, 2026, employers will be required to pay their super entitlements at the same time as their employees’ regular pay. You may wish to integrate payday super into your payroll systems earlier than this date so you’re ready to go well before the requirement starts. To prepare for payday super you should: 

• Assess your current processes and find opportunities to embed super into your payroll. 
• Communicate and outline the transition to payday super with employees, addressing any questions or concerns.  
• Seek advice from HR and IR experts to ensure compliance and a smooth implementation.
  

How technology can streamline payday super management 

Many employers have a manual process for paying super. New staff often choose a super fund via a paper-based standard choice form and the information is entered into payroll manually. When it’s time to pay super, employers will employers extract a file from payroll and load the information into a super fund portal. STP reporting may then be completed separately after all of these steps.  

In contrast, if you use foundU's payroll software, you can already pay super with every pay cycle or at a cadence that suits your business. You can also:  

• Easily capture every employee’s chosen super fund via digital employee onboarding. 
• Send information about worked shifts, time, and attendance to payroll via native rostering software so you can track wages and super obligations in real time. 
• Automatically send all employee payroll data, including salaries, wages, PAYG withholdings, and superannuation to the ATO each pay cycle via our seamless STP V2 compliant integration. 
• Easily accrue, track, and report your superannuation liabilities in detail to monitor your cashflow. 
• Choose to make fast and secure super payments via our integration partner, Beam.  
• Remove the need for data exports and files. 
• Validate payroll and data accuracy in real time. 

Once you have a combined payroll and super system, you can save time, pay with precision, provide greater employee satisfaction, achieve better compliance by reducing room for error, and enhance your reporting capabilities. 

Super should become a native or integrated component in payroll 

We understand that it can be hard to keep up with new legislation. However, we do expect that Australia’s superannuation system will continue evolving. 

The good news is that there are many ways you can simplify and speed up your payroll processes. By getting comfortable with digital employee onboarding and automated payroll systems, you will be able to meet future requirements with ease.  

If you want to learn more about how you can meet the upcoming payday super requirements, then book a demo of foundU. We can show you our easy-to-use payroll platform and seamless superannuation solutions.