Arm yourself with the information your organisation needs to comply with the new Payday super law, which comes into effect from 1 July.

It’s being hailed as the biggest change to the superannuation system in 30 years: from 1 July, employers will be required to pay super at the same time as wages or salaries.

Organisations that don’t comply face fines and interest, so understanding the new requirements is crucial.

“Now is the time for HR to ensure that payroll has the necessary tools, support and comprehensive training needed for payday super compliance,” says Tracy Angwin, Director of the Australian Payroll Association.

Below, Angwin answers common Payday super questions to help HR practitioners to transition into the approach in just a matter of months.

1. What has prompted this change?

Payday super legislation passed both houses of parliament in November 2025, but the problem it is intended to address was first identified in 2010, when the Cooper Review into superannuation was tabled.

“The review identified a massive gap between what the government had anticipated would be available for retirees and the amount that employers were actually sending to employees’ accounts,” says Angwin.

The review made a raft of recommendations, including that employers should:

1) Make super payments electronically via a clearing house

2) Report the information to the ATO

“The first recommendation was addressed  in 2014 with the introduction of SuperStream: one payment and data file to be sent to a clearing house where monies and superannuation data are disbursed to superannuation funds,” says Angwin.

“The second recommendation was addressed with the introduction of Single Touch Payroll, where the employee’s year-to-date superannuation guarantee (SG) contributions are reported to the ATO by the employer.”

Now, the introduction of Payday super aims to ensure that an employee’s legal SG entitlements are paid promptly and regularly.

“Ultimately, Payday super is here to ensure employers are paying mandatory SG contributions to an employee’s fund in a timely manner, helping to bridge the deficit identified in the Cooper Review.”

2. What penalties does an organisation face for non-compliance?

Under the current rules, employers must pay a penalty, known as the super guarantee charge (SGC), if they fail to pay their employees’ super on or before quarterly deadlines.

From 1 July, a new SGC regime will impose a penalty if an employer does not pay their employee’s super within seven business days of paying their salary or wage.

The charge would include interest calculated on a compounded daily basis on any SG shortfall as well as an administration fee of up to 60 per cent of the shortfall.

Angwin points out that if employers pay super at the same time as wages or salaries, there will be little risk of incurring the SGC.

“The new SGC regime is designed to reduce penalties, however employers will still be liable for any assessment undertaken by the ATO.”

3. Are there any exceptions to the requirement?

There are several notable exceptions to the seven-day rule:

• For new employees, the initial super contribution can be made up to 20 days after a wage or salary is paid;
  
• For existing employees who change super funds, the first payment to the new fund can be made up to 20 days after a wage or salary is paid;
• Exceptional circumstances, such as IT outages, can trigger an extension.

“State-wide and nation-wide public holidays also extend the due date, but regional show days and the like, which are not state-wide, do not,” says Angwin.

4. Does this override our existing enterprise agreement (EA) that says we pay quarterly?

Yes. Angwin stresses that any previous super arrangements become null and void from 1 July.

“The new legislation overrides the terms of any EA. The blanket rule is that employers must make SG contributions within seven business days of payday.”

5. If a payment fails due to an employee’s incorrect fund details, are we still liable for the penalty?

Yes. “It is the employer’s responsibility to ensure that contributions are not only made within seven business days of payday, but also that they are allocated to the employee’s superannuation account in that timeframe,” says Angwin.

In other words, the onus is on the employer to use the correct fund details for each of their employees. 

“Now is the time for HR to ensure that payroll has the necessary tools, support and comprehensive training needed for payday super compliance.” – Tracy Angwin, Director, Australian Payroll Association

6. Should we be setting aside more money to comply with this change?

Theoretically, the amount of super that your organisation pays its employees in a year shouldn’t change. But processing SG contributions with every pay run could require additional resourcing.

“A labour-intensive payroll process may be more costly to an employer than a potential review of their software,” says Angwin. 

“A software product with new functionality may be more suitable and cost-effective than manual processing.”

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7. How do we handle mid-cycle adjustment and ‘out of cycle’ payments?

The new legislation treats ‘out of cycle’ payments differently.

“SG contributions relating to payments made outside the normal pay run frequency – such as bonuses, commissions and backpays – can be made within seven business days of the next normal payrun.”

8. When an employee leaves, we often pay their final wages immediately. Is the super due then, too?

Angwin says the ATO has yet to provide definitive guidance on this scenario. 

“Our understanding is that if the payment is made as part of the ‘normal’ payrun, then yes, the seven-business-day rule applies. However, if it is made as an ad-hoc or out-of-cycle payment, then the SG contribution is due within seven business days of the next normal payrun.”

9. What can HR do to help their organisation prepare for the change?

Angwin says a key focus for HR should be ensuring employees’ super fund details are collected and recorded correctly, therefore minimising the likelihood of SG contributions going astray and triggering penalties.

“Conduct a thorough review of the payroll system and onboarding process to ensure a new employee’s superannuation details are accurate at the time of engagement.”

HR can also play a leadership role by facilitating clear communication between payroll, finance and people teams about the change; and advocating for the payroll team, who may need additional resources or training.

“Communicating Payday super changes to employees is also strongly advisable,” says Angwin. “A simple fact sheet that addresses common employee queries would assist in the transition process.”

For more information about how Payday Super works, visit the ATO’s website.

All information, content and materials available on this site are for general informational purposes only. The contents of this article do not constitute legal advice and should not be relied upon as such