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Super to Be Paid on Payday: Proposed Government Reform

Super to Be Paid on Payday: Proposed Government Reform

By Prime Advisory, 19 June 2023

Employers take note—a significant change is likely on the way regarding employee superannuation payments. 

The Federal Government announced that from July 1 2026, employers will be required to pay their employees’ super at the same time as their salary and wages. 

Currently, employers need only pay their employees’ super entitlements on a quarterly basis.

In a statement on May 2, the government labelled the initiative as a “reform that will benefit the retirement incomes of millions of Australians”.

“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,” the statement said.

Unpaid Super Adds Up to Billions 

The government has declared the move will benefit both employees and employers.

While acknowledging that most employers “do the right thing”, the country’s leaders pointed out that the Australian Taxation Office (ATO) estimated $3.4 billion worth of super went unpaid in 2019–20.

“Payday super will make it easier for employees to keep track of their payments, and harder for them to be exploited by disreputable employers,” the government indicated. 

“The change will particularly benefit those in lower paid, casual, and insecure work who are more likely to miss out when super is paid less frequently.”

One such scenario the government is attempting to avoid with the reform is when a casual worker moves on from a role before their quarterly super payment is due or when a business folds or goes bankrupt. 

Payday Super—a Win for Women Workers

Additionally, women are tipped to be better off once this change comes into effect.

An Industry Super Australia analysis of the 2019-20 tax file revealed that one in five women were underpaid super. Alarmingly, the underpayments totalled a whopping $10.8 billion over seven years.

Additionally, the government has suggested that switching to payday contributions should provide a boost to all employees’ super balances. The rationale is that contributions will compound for longer if they are paid more frequently.

As far as employers are concerned, the powers that be suggest more frequent super payments will make business owners’ payroll management smoother with fewer liabilities evident on their books.

The 2026 start date has been designed to provide small business employers, super funds, and payroll providers with ample time to prepare for the change.

Payday Super Not Yet Concrete

It must be noted that as of June 2023, the change is not set in stone. The Australian Taxation Office (ATO) has indicated that it will work in conjunction with industry and stakeholders on the proposed updates in the second half of 2023.

Super reforms have been a hot topic for the government so far this year. In February, the nation’s leaders announced a new tax impacting those with super balances of $3 million or more—with the hike to kick in from 2025.


Would you like to chat about the proposed changes to super payments for employees? Reach out to [email protected] for more info or to discuss any other business-related financial queries.


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