Payday Superannuation: Key Changes for Employers and Employees

The Australian Government has introduced a significant reform in the 2023-2024 budget to change how superannuation guarantee (SG) contributions are managed. From 1 July 2026, employers must align the payment of SG contributions with salary and wages on a “payday” basis, replacing the current quarterly contribution requirement.

What Does This Mean for Employers?

Starting from 1 July 2026, employers must pay superannuation contributions on the same day that Ordinary Time Earnings (OTE) are paid to employees. This change aims to reduce the risk of non-payment and underpayment of superannuation, which impacts the retirement income of millions of Australians.

Key Impacts:

1. Improved Transparency and Accountability: More frequent super payments will enable employees to monitor their superannuation entitlements closely, reducing the likelihood of exploitation by unscrupulous employers. Employees can easily verify payments by checking their super fund transactions and reporting any discrepancies to the Fair Work Ombudsman or the ATO.
2. Streamlined Payroll Management: Regular superannuation payments will help businesses manage their payroll more effectively, and prevent the accumulation of large liabilities.

Super Guarantee (SG) Payments Alongside Wages

From 1 July 2026, whenever employers pay OTE, they will have seven days to ensure that SG contributions reach the employee’s superannuation fund. If employers fail to comply, they will be liable for the updated SG Charge.

Limited Exceptions:

• New Employees: Employers will ahve a deferred due date for contributions related to OTE payid within the first two weeks of employment.
• Small and Irregular Payments: When employers make these payments outside of ordinary pay sycle, they will be treated as a payday when the next OTE payment occurs.

Updated SG Charges

The updated SG Charge reflects the new payday super environment. Employers who do not make full and timely contributions will face significant penalties. The updated SG Charge:

• Ensures that employees receive full compensation for any delays in receiving their super.
• Holds employers accountable by encouraging prompt rectification of unpaid superannuation.
• Impsoes harsher penalties for employers who repeatedly fail to comply.

The longer the period of non-compliance, the higher the SG Charge. Employers should establish robust governance and systems to ensure compliance with superannuation obligations.

For more detailed information, visit the Treasury’s official factsheet.

Need Help Navigating These Changes?

If you need assistance understanding or implementing these new requirements, feel free to contact us today!