Payday super laws pass - here's when it will come into effect
The Payday Super laws successfully passed through the Senate this week - here's what it means for workers and employers.
From July 1, 2026, employers will be required to pay employees' super contributions at the same time as salary and wages.
While most employers do the right thing, the Australian Taxation Office estimates $3.6 billion worth of super went unpaid in 2020-21 as a result of the timing gap between paying wages and paying employee super contributions.
By switching to the new system of payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around 1.5%, or $6000, better off in retirement, according to the Association of Super Funds of Australia (ASFA).
ASFA welcomed the passage of the Treasury Laws Amendment (Payday Superannuation) Bill, describing it as a game-changing reform for fairness and Australian workers' retirement outcomes.
ASFA chief executive Mary Delahunty said the reform will go some way to address the problem of unpaid super, which sees more than $5 billion in retirement savings withheld from Aussie workers each year.
"Payday Super is one of the most significant reforms to the superannuation system in decades, and it's long overdue. Paying super with wages will make the system fairer, boost retirement balances, and ensure super is achieving its core objective," Delahunty said.
"The sector has long advocated for this change, and now that it's law, the real work begins: ensuring regulations are practical, delivering a smooth transition for employers, payroll providers and funds alike. ASFA will lead that work on behalf of the sector."
Treasurer Jim Chalmers said the reforms will help stop "disreputable" employers from exploiting their employees, with over $5 billion in unpaid super that should have gone to workers.
"Super is an entitlement for workers, like salary or wages, and unpaid super is a form of wage theft," Chalmers said.
"This issue disproportionately affects more vulnerable Australians and also Australia's working women.
"This bill will help put a stop to it."
The Bill was passed through the Senate without changes, despite the Coalition calling for a delay in the start date for small business with less than 20 employees. A proposed amendment was squashed in a vote on October 30.
"While the principle of Payday Super is sound, Labor's execution is anything but. Once again, we're seeing a rushed, reckless and poorly planned rollout of a policy that risks creating chaos for small businesses right across the country," deputy leader of the opposition Ted O'Brien argued late last month.
"The Coalition stands ready to support worthy reform - we always have - but, as is standard practice for a bill with such wide-ranging impacts... we are asking the government to reconsider its rushed implementation to allow small businesses sufficient time to prepare and adapt."
AustralianSuper chief member officer Rose Kerlin said she was delighted the new laws had passed, adding that the super fund has long supported the reforms on behalf of members.
"We understand for businesses big and small; Payday Super will be a big change. Our team are focused on supporting business by delivering compliant, integrated payment technologies and tailored education so they can confidently meet their obligations," Kerlin said.
"For many working Australians, this legislation means their super will be paid earlier and invested earlier, maximising the benefit of compounding growth. Payday Super will also help to address the billions of dollars in unpaid and underpaid super each year, so it's paid to the Australians who earned it."
Also welcoming the move, Rest's chief strategy officer Tyrone O'Neill said a significant proportion of the super fund's two million members are currently paid superannuation guarantee payments less frequently than their take home pay.
"Thanks to these significant reforms, these members will soon receive their super at the same time they're paid. They will receive a meaningful financial benefit through the compounding returns on more frequent contributions," O'Neill said.
"We congratulate the government and the Australian parliament on passing this legislation and look forward to continuing to work with employers and industry on implementing the changes."
Meanwhile, Australian Retirement Trust chief executive Kathy Vincent said Payday Super will bring greater consistency to the way Australians save for retirement, by making sure super is paid on the same schedule as a worker's wages.
"From July 1, 2026, Australians will receive their full pay package - wages and super - at the same time," Vincent said.
"This change, with bipartisan support in the parliament, will make super fairer, simpler and more transparent."
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