Switch to Payday Super brings new pressures, new compliance

From 1 July 2026, employers will be required to make superannuation contributions at the same time they pay their employees' regular wages, instead of at the conclusion of each financial quarter. Employers who don’t comply with this new requirement will face increased penalties.

The ATO will also be given increased visibility over payroll data and superannuation fund reporting to assist with monitoring the compliance of this new requirement.

Understanding the changes to superannuation contributions

On 2 May 2023, the Australian Government introduced plans to modify the current Superannuation Guarantee (SG) scheme through the Payday Super reform. This was part of the broader Securing Australians’ Superannuation Package announced in the 2023-24 Budget.

Under the new reform, employers will be required to make SG contributions to an employee's nominated super fund within seven calendar days of the employee's regular wages being paid. This replaces the current SG timeline which requires contributions to be made by the employers at the conclusion of each quarter.

The proposed changes will take effect 1 July 2026.

This reform follows an increased focus on employer payroll and wage compliance in recent years in response to growing claims of wage theft and unpaid super entitlements, and should give employees greater visibility over their owed entitlements.

The Government estimates that the Payday Super reform will benefit 8.9 million Australians and their retirement savings by allowing their superannuation contributions to be received and invested earlier and more frequently throughout their working life.

Penalties under the new Payday Super framework

On 18 September 2024, the Government released further guidance on the Payday Super reform, including the updated penalties for employers who fail to comply with the new SG requirement.

Presently, delayed SG contributions are penalised at a nominal interest rate of 10% per annum plus an administration fee of $20 per employee, per quarter. Employers who deliberately fail to disclose unpaid or late SG contributions may also face an SG charge of up to 200% of the unpaid amount.

Under the new framework, employers will be penalised an SG charge comprised of:

• the SG shortfall amount;
• daily interest on the SG shortfall calculated at the general interest charge rate on a compounding basis (currently 11.36%); and
• an additional charge to reflect the cost of enforcement, up to 60% of the SG shortfall amount. This figure will be reduced where employers voluntarily disclose their failure to make the timely contribution and take steps to address the shortfall.

The SG charge will ensure that employees are fully compensated for any delay in receiving their super, and incentivise employers to disclose unpaid SG contributions in a timely manner.

Exceptions for certain superannuation contributions

There will be some limited exceptions for the new requirement for SG contributions to align with an employee's regular pay cycle:

• SG contributions owed within the first two weeks of employment for a new employee will have their due date deferred until after the first two weeks of employment; and
• small and irregular payments that occur outside an employee’s ordinary pay cycle will not be considered a payday until the next regular pay cycle occurs.