Employer guide to payday super

Overview

From 1 July 2026, employers will be required to pay Superannuation Guarantee (SG) contributions at the same time they pay wages, replacing the current quarterly payment model.

This shift, which forms part of the Australian Government’s Payday Super reforms, aims to reduce unpaid or late super, improve transparency for employees, and support more consistent retirement savings.

For employers, aligning super with pay cycles is expected to ease administrative workload by eliminating large quarterly payments and improving cash flow management through smaller, more regular contributions.

Under the new rules, SG payments must be received by employees’ super funds within seven calendar days of each payday.

A payday is defined as the date wages for Ordinary Time Earnings (OTE) are paid, and each pay cycle carries its own seven-day deadline.

Employers who fail to meet these timeframes may face penalties under an updated SG charge framework, which includes interest and administrative penalties for late or missing payments.

Late Payments

The SG charge will still apply to late or missing payments, but it’s being updated to reflect the new payday-based system. Employers who don’t pay SG on time will need to make up the shortfall and will also be liable for:

• Daily compounding interest on the outstanding amount, calculated at the general interest charge rate (currently 11.36% annually).
• An administrative uplift, which may be up to 60% of the shortfall. This can be reduced if the employer voluntarily discloses the late payment.
• A further payment penalty of up to 50% if the SG charge is not paid within 28 days of an ATO assessment.

Importantly, while the SG contribution itself remains tax-deductible, any penalties or interest charges incurred after an ATO assessment will not be deductible.

Limited Exceptions to the Payday Rule

While the Payday Super reforms require employers to pay superannuation contributions promptly with each payday, there are a few limited exceptions to this rule.

1. For new employees, contributions can be deferred during the first two weeks of their employment, allowing employers a short grace period before being required to make SG payments.
2. Additionally, small or irregular payments that fall outside an employee’s usual pay cycle will not create an immediate superannuation deadline. Instead, these payments will be combined with the next regular payday, simplifying the payment process for employers managing occasional or irregular wage adjustments.

Transitional Support for Employers

To support employers through this transition, the Treasury claims to be introducing several changes to help streamline the process and reduce errors.

These include:

• Superannuation funds will be required to allocate or return employer contributions within three business days, down from the current 20 days.
• The SuperStream data standard will be updated to support faster payments and provide clearer error messages, allowing issues to be fixed promptly.
• From 1 July 2026, the ATO’s Small Business Superannuation Clearing House will be phased out. Employers, especially small businesses, are encouraged to start planning now to move to payroll or clearing house solutions that support Payday Super.

Tighter Monitoring and Enforcement

With the shift to payday-based superannuation payments, the ATO will gain greater visibility into compliance by matching data from Single Touch Payroll (STP) and super fund reporting. This enhanced oversight will enable the ATO to more quickly detect missed or late contributions and intervene earlier. To support this, employers will be required to report both Ordinary Time Earnings (OTE) and their total superannuation liability for each employee in their STP submissions. Meanwhile, employees themselves will be able to monitor contribution flows more closely, reducing the risk of long-term underpayment slipping under the radar.

However, during the exposure draft consultation, many employers and representative bodies flagged potential challenges with this increased scrutiny. For instance, several accounting bodies and software providers warned the proposed 7-calendarday window for contribution delivery may not allow sufficient buffer for payment delays caused by public holidays or banking lags, thus increasing the risk of employers being penalised for factors outside their control. Some submissions argued that the compliance burden is heavier for small businesses, especially given uncertainties around software readiness, STP reporting adjustments, and data validation capabilities. Others urged the government to extend the transition period or delay the commencement date, to give employers and service providers adequate time to adapt without facing harsh penalties too soon. In recognition of these concerns, the ATO has proposed a draft Practical Compliance Guideline for the first year of implementation that treats low risk employers more leniently and focuses enforcement efforts on higher risk cases. However, the implementation timeframe is still narrow, and the significant concerns raised during consultation have not been resolved.

Read the submissions here: Submissions – Payday super – exposure draft – Consult hub

Takeaway

This update is to help Master Builders ACT members stay informed about their obligations under the upcoming Payday Super reforms, and to remind you that compliance is mandatory. With the new rules commencing in less than a year, now is the time to prepare.

1. Review your payroll systems
2. Work collaboratively with your payroll provider, bookkeeper, or accountant to confirm your systems will meet the new compliance requirements.
3. Make sure internal teams understand what’s changing. Encourage questions and early engagement to avoid confusion later.
4. Stay up to date with ATO and government guidance. The legislative and administrative details are still being finalised.

Contact Us

The Master Builders ACT Workplace Relations Team is here to support you. If you have any questions or need guidance, please get in touch.

📞 Phone: (02) 6175 5900

📧 Email: Workplace@mba.org.au