The Shift to Payday Super

Starting 1 July 2026, employers will be required to pay super contributions at the same time as salary and wages. This reform is being hailed as a ‘game-changer’ for Australians, as it promises to help workers earn more, keep more of their earnings and retire with greater financial security. 

Read on to discover how this change could impact you. 

Key benefits 

According to ATO data, an estimated $3.4 billion gap exists between what is owed to employees and what is paid. More frequent super payments will provide workers with greater visibility over their superannuation, helping to reduce the risk of underpayments. Payday super will also have a significant impact on retirement savings, ensuring workers benefit from the power of compounding investment returns through more frequent contributions. The government estimates that a 25-year-old earning the median income, receiving super quarterly and wages fortnightly could be around $6000 or 1.5% better off at retirement. 

How will Payday Super work? 

Currently, employers are only required to pay Superannuation Guarantee (SG) contributions on a quarterly basis, with the due date being up to 28 days after the end of the quarter. This means employers can hold back super contributions for up to 3 months before making the payment. 

Under the Payday Super, employers will have seven days from each employee’s payday for their super to be received by the super fund, with an exception for new employees and irregular payments that occur outside the ordinary pay cycle. This new rule will integrate with the existing Single Touch Payroll (STP) systems, with minor adjustments to capture ordinary times earnings data. 

Penalties for late super payments

Failing to meet superannuation obligations can lead to significant penalties for employers. Under the current system, if super payments are late, employers are liable for an SG charge (SGC) which includes: 

• The underpaid super amount (called the ‘shortfall’) 
• 10% interest per year on that shortfall from when the super was due 
• A $20 admin fee for each employee per quarter 

With the new payday super rules, employees will be fully compensated for delays and stricter penalties will apply for employers who consistently miss their obligations. If a payment is late, the SGC will consist of: 

• Outstanding super shortfall, calculated based on ‘ordinary time earnings’ instead of total wages
• Notional earnings which is daily interest on the shortfall from the day it was due, calculated at a compounding interest rate 
• Administrative uplift, an extra charge of up to 60% of the shortfall to cover enforcement costs. This can be reduced if the employer admits error. 

• General interest charge, which adds interest on unpaid super and the notional earnings plus the administrative uplift
• SG charge penalty, up to 50% of the unpaid super charge if it is not paid within 28 days of being assessed 

Key takeaways 

While the new payday super rule is not yet law, if it does pass, employers will need to pay super at the same time as wages. This will improve transparency for employees but will lead to stricter penalties for late payments, making it essential for businesses to stay compliant. On the upside, this reform will help Australians grow their retirement savings more effectively through frequent contributions. 

To ensure you’re prepared or for more information on Payday Super, reach out to your Simmons Livingstone advisor at 1800 618 800 or via email at admin@simmonslivingstone.com.au