The proposed Payday Super legislation in Australia represents a significant shift in the way superannuation payments will be handled. Expected to come into effect in July 2026, the new legislation will require employers to pay superannuation entitlements on the same day as wages, instead of quarterly. This change is designed to ensure employees receive their superannuation benefits in a timelier manner, addressing longstanding issues of unpaid or delayed super contributions.
Why the change matters
Currently, superannuation contributions are paid quarterly, which allows some employers to delay payments or even withhold them entirely. According to estimates, billions of dollars in unpaid superannuation are owed to Australian workers each year. For many employees, especially younger workers and those in low-income positions, the impact of unpaid or delayed superannuation contributions can compound over time, resulting in a significant shortfall in their retirement savings.
By mandating that superannuation contributions be paid alongside wages, the government is attempting to close this gap. The legislation will require payroll professionals to adjust their processes, ensuring that superannuation is disbursed with each pay cycle, which could be weekly, fortnightly, or monthly depending on the employer’s payroll frequency.
Compliance and Payroll Implications
The compliance burden on businesses and payroll professionals will increase as a result of this legislative change. Payroll systems will need to be updated to facilitate real-time superannuation payments, requiring integration between payroll software and superannuation funds. Employers must ensure they are prepared for this shift, as the penalties for non-compliance could be substantial.
For payroll professionals, the ability to process these payments efficiently and ensure they are compliant with the new laws will be paramount. Payroll software systems will need to support real-time payment processing, and payroll departments may need to work closely with their finance teams to manage the increased frequency of these payments. Additionally, employers will need to remain vigilant about compliance issues to avoid costly penalties from regulatory bodies such as the Australian Taxation Office (ATO) and Fair Work Australia.
Technology and Process Adjustments
As payroll becomes increasingly automated, the Payday Super legislation will likely accelerate the adoption of more advanced payroll technologies. Many payroll systems today already offer features like real-time payment processing and integration with superannuation funds, but employers will need to ensure their systems are up to date. Implementing these changes may also offer an opportunity for businesses to review and improve their broader payroll processes. Streamlining and automating processes will help ensure compliance, reduce errors, and limit the potential for fraud.
The Payday Super legislation will have far-reaching impacts on the payroll profession in Australia. As the gatekeepers of compliance, payroll professionals must stay informed about legislative changes and ensure their processes are up to date. This reform, while increasing the compliance burden, also provides an opportunity for payroll departments to demonstrate their value to the organisation by safeguarding employee entitlements and protecting the business from non-compliance risks.
As we move toward the implementation date, it will be essential for payroll professionals to engage with their software providers, ensure their processes are capable of supporting real-time superannuation payments, and be prepared to educate their colleagues on the operational and financial implications of the new system.
