Payday Super is another step closer

Payday Super took a big step towards becoming a reality for many employers, with the release of the draft legislation and regulations from the Treasury in March. Here's a quick summary of what's proposed and what it means for employers.

• Super contributions must be in an employee’s super account within seven calendar days of payday.
• Super funds have three business days to allocate or return contributions.
• Where employers fail to pay contributions in full and on time, they are liable for the Super Guarantee (SG) Charge.

The draft Bill introduces the term 'Qualified Earnings' (QE) for an employer's Superannuation Guarantee (SG) obligations. QE consists of:

• An employee's Ordinary Time Earnings (OTE), used to calculate SG obligations under the existing SG framework.
• Amounts of OTE that have been used as part of a salary sacrifice arrangement for super contributions.
• Other amounts which are currently included in an employee's salary or wages for SG.

'QE' day is the new term for the day when you pay your employees.

The draft Bill also updates the Super Guarantee Charge (SGC) employers will face for not meeting the new Payday Super timeframes.

A Notional Earnings Interest Component is applied to the amount of super that is unpaid, based on an employee’s QEs. This is to ensure an employee’s super balance isn't affected by delayed payments.

The government will then apply an additional 60% ‘administrative uplift’ to this shortfall. This may be reduced if an employer makes voluntary disclosures for late payments.

Changes are also on the table for the stapled fund look up process. Under the draft Bill, employers will be able to request an employee’s stapled fund information before, during, or after offering a choice of fund (currently employers can only request this information after offering them a choice of fund).

The draft Bill also introduces a 21-day window for employers to make their first contribution for a new employee. Together with getting stapled fund information earlier in the process, the extra time to set up correct details for new starters will be a great help for many businesses, particularly those with high employee turnover.

Importantly, as part of Payday Super, the draft Bill proposes a ‘choice loading penalty’ when an employer fails to comply with an employee's choice of fund instructions. The penalty amount is 25% of non-compliant contributions, capped at $1,200 per notice period.

Payday Super fundamentally changes the process of paying super. Employers will have strong accountability to have in place the appropriate processes and software to pay contributions to employees on time and in full, to remain compliant and avoid penalties.

“Paying contributions early, with good quality data, will be crucial to meeting Payday Super timeframes,” Mathew Gilroy, Head of Employer, Platforms and Partnerships said. “Every bit of data that can be validated upfront for an employer will help reduce delays and make paying super easier.”

While the draft Bill still needs to pass parliament, now is the time to begin preparing for Payday Super. Here are some steps employers should consider:

• Assess your current contribution payment frequency and consider the steps involved for your business to move to payday super contributions. If practical for your business, you could even move to payday super contributions well before 1 July 2026, so when Payday Super starts, you’re ready.
• Test your existing wage processes and pay close attention to exceptions and errors.
• Evaluate whether your current solution suits your future needs and research alternatives if necessary.

We already offer contribution solutions that can handle super contributions at payday, and we’re continuing to build on these as we work through the requirements of the draft Bill.

We will be upgrading our Employer Online, moving to newer technology which has faster processing, handles larger contribution loads and is nimble for us to make regular upgrades.

With the release of draft legislation, the government invited submissions in April. Australian Retirement Trust offers its own clearing house, gateway and super payment technology (Beam Connect). We also represent super funds in various ATO and Industry working groups, and as a result we made an individual submission to make sure the draft Bill is in the best interest of members and employers who have chosen us as their default fund.