Payday Super is Coming from 1 July 2026: What Employers Need to Know

Currently, employers only need to contribute superannuation contributions at least every 3 months. If the employer does not make super contributions on time, additional charges apply. From 1 July 2026, employers will be required to make superannuation contributions within 7 business days of an employee’s payday (PayDay), or they will be liable for an updated superannuation guarantee charge (SGC).

The increased frequency for making superannuation guarantee (SG) contributions compared to the quarterly model will enable unpaid or underpaid SG to be detected and managed at an earlier stage.

Qualifying earnings (QE) is a new term for the types of payments made to employees that are used to calculate the SG under Payday Super. QE includes:

1. ordinary time earnings (OTE);
2. all commissions paid to an employee;
3. salary sacrifice superannuation contributions that would qualify as earnings had they not been sacrificed to superannuation; and
4. earnings paid to workers who fall under the expanded definition of employee in section 12 of the Superannuation Guarantee (Administration) Act 1992 (Cth), including payments made under a contract that is wholly or principally for the labour of a person.

The SGC for late or unpaid super will be updated to include:

1. the SG shortfall amount based on the QE;
2. individual notional earnings which will compound daily to incentivise employers to pay on time;
3. administrative uplift of up to 60% of the sum of the final SG shortfalls and individual notional earnings components for the QE day which can be reduced in certain circumstances, to reflect the cost of enforcement and encourage employers to make voluntary disclosures to the ATO; and
4. a choice loading (25% of the value of SG contributions for a QE day) where an employer fails to comply with the choice of fund rules.

Other important information

1. Late contributions and the SG charge will become tax deductable but any applicable general interest charges or late payment penalties relating to SG charges will not be tax deductable.
2. The Small Business Superannuation Clearing House will be retired from 1 July 2026.
3. The deadline for superannuation funds to allocate or return contributions that cannot be allocated will be reduced to 3 business days (down from 20).
4. Employers will be required to report in Single Touch Payroll (STP) both the QE and the superannuation liability for an employee, ensuring the SG can be correctly identified.

The ATO intends to consult for 12 months post implementation and will differentiate employers into three possible categories being low, medium and high-risk employers. The following draft guidelines have been released by the ATO:

Low Risk employers are those who make an effort to pay their employees’ super contributions in alignment with each pay cycle.

Medium Risk employers are those who comply with Payday Super but some contributions are late or, employers who make sufficient contributions but do not change the frequency of contributions in line with PayDay Super laws.

High Risk employers are those who make insufficient contributions by the end of the quarter, or incorrectly calculate QE and make insufficient contributions by the end of the quarter or, have individual final SG shortfalls for their employees.

The ATO’s risk approach currently indicates a medium risk employer will face investigation but at a lower priority than a high-risk employer with high risk employers facing the ATO’s highest priority resourcing.

How should employers prepare?

Employers should prepare early by:

1. updating payroll software ahead of time;
2. training payroll teams so everyone is aware of compliance obligations and the implications of non-compliance;
3. preparing for delays or rejections of contributions by making a contingency plan detailing methods to resolve issues quickly;
4. consult on the ATO’s 12-month consultation and compliance approach to have your say; and
5. speak to your finance providers now to consider payroll finance to ease cash flow impacts ahead of time.

If your business requires assistance with employment or workplace law matters, please do not hesitate to contact Jade Scheuerle and our employment team on 1300 068 736.

This article was written by Jade Scheuerle, Senior Employment Lawyer.