Payday Super: what it will mean for your business

The Payday Super legislation has finally been introduced to Federal Parliament after years of discussion. Designed to put a stop to wage theft in the form of unpaid super, Payday Super will require employers to pay their employees’ superannuation at the same time as their salary and wages. The changes will take effect from 1 July 2026.

Impact for employees

This change will not only make it easier for employees to keep track of their super, it will also boost their overall super fund balance at retirement. Being paid super sooner helps to grow retirement savings faster due to the opportunity to earn compound interest sooner. As a result, Payday Super is tipped to deliver an extra $7,700 on average for working Australians by retirement. It will also remove the problem of casual workers habitually missing out on quarterly super payments under the current system.

Impact for your business

Small and medium-sized businesses employ around two-thirds of Australia’s workforce so ensuring the SMEs are ready for this change will be critical to a successful rollout of Payday Super. Things to consider include impact on cashflow, management of increased administration and payroll software automation.

With increased frequency of payments, cashflow will be a big consideration for small businesses. Cashflow planning, regularly reviewing financials, tracking expenses and forecasting income will be critical to ensuring a smooth operation. Whilst it may seem challenging at first, Payday Super will benefit employers by removing the need to manage large lump-sum payments every few months.

Cashflow management tips:

• Set aside funds for super payments in advance – start proactively setting aside funds for super to minimise the impact on cashflow when super payements are due. Periodically review your financial position to ensure you have enough funds for both payroll and super obligations, especially as the frequency of payment increases.
• Renegotiate terms with suppliers – managing outgoing cash flow can give you more breathing room for more frequent superannuation payments. If you have good relationships with suppliers, request longer payment terms to delay outgoing cash without incurring penalties. This can give you more flexibility to manage super payments alongside other expenses.

Paying superannuation with each pay cycle will increase the frequency of super payments and potentially add to the administrative workload. Ensuring your payroll system supports automated super payments will help in managing this process.

• Upgrade payroll software for automated super payments – if you haven’t already now is the time to invest in payroll software that supports automated payments to ensure super is processed on time and you stay compliant.

Summary

Despite the initial adjustment, Payday Super will have positive long-term effects for businesses:

• Easier cash flow management with no more large, unexpected quarterly payments disrupting finances.
• Better compliance by paying super with wages meaning no more stress about meeting deadlines or penalties.
• Happier employees as workers can track their super contributions in real-time, increasing transparency and trust.
• Simplified payroll processes with super being handled alongside wages, bookkeeping and payroll management become more streamlined.

With changes to take effect from 1 July 2026, now is the time to start preparing.