The “payday super” legislation, now passed by Parliament, significantly changes how superannuation will be paid. From 1 July 2026, employers must pay their employees’ super contributions within seven business days of payday, replacing the quarterly system.
The reforms strengthen the superannuation system by helping the ATO to enforce the law and identify employers not making contributions, while benefiting employees through more frequent contributions that will grow and compound over their working life.
What does this mean for employers?
As an employer, if you haven’t started reviewing your technology and processes in anticipation of the new changes, now is the time to start. Implementing the changes will take time, and it’s not just your internal software or technology infrastructure that will need to be upgraded – software providers, payment intermediaries and super funds will all face challenges.
The best thing you can do is to be prepared, so you’ll be ready to make your employee super contributions on time and remain compliant with your obligations. You need to take the following into consideration while you make plans for transitioning to payday super:
- payment timeframes: your employee super contributions need to reach your employees’ super funds within seven business days of their payday, whether you pay weekly, fortnightly or monthly;
- new terminology: “ordinary time earnings base” will become “qualifying earnings” (QE), and will be used to calculate super contributions and shortfall charges;
- extended timeframes: these apply in specific circumstances – for example, you’ll have 20 business days to make contributions for new employees, or for existing employees who switch their super fund;
- closure of the Small Business Superannuation Clearing House: the SBSCH is due to close on 1 July 2026, so you need to make arrangements to transition to suitable payroll software if you currently use the service;
- penalties and charges: understand how the new penalties and charges will apply if you have a contribution shortfall, and understand the ATO’s approach to compliance in the first year of operation of the new regime (see draft PCG 2025/D5 – keep an eye out for the finalised version).
What does this mean for employees?
The changes mean that you’ll receive your super contributions in alignment with your pay cycle, whether you get paid weekly, fortnightly or monthly. This can benefit you by:
- making it easier to track if your employer makes your super contributions on time;
- compounding contributions sooner, which means more frequent contributions could yield higher returns;
- offering better protection to address unpaid super, as employers will face increasing penalties for non-compliance;
- giving faster processing times, as super funds will have stricter timeframes for processing contributions, with allocation deadlines shortening from 20 business days to three business days.
What happens next?
For employers, planning ahead to implement the new changes will save you from compliance issues from 1 July 2026. Make sure your technology and processes are ready for more frequent super payments and seek out alternatives for the SBSCH if you formerly used it. The ATO or your financial or tax advisers can help you if you need more information on how to proceed.
For employees, keep an eye out for information from your employer and super fund, or visit the ATO website to learn more about the changes. Get into the habit of checking your pay slips and your super fund to verify that your contributions are being paid on time.
Regulations supporting the payday legislation are yet to be released and could also have an impact on employers’ planning, so stay informed and aware of any potential changes in the months ahead.
