Payday Super: Summary of key changes

On 1 July 2026, the Federal Government’s long-anticipated Payday Super reforms will come into effect, fundamentally altering the way employers meet their superannuation guarantee (SG) obligations. The reforms, enacted by the Treasury Laws Amendment (Payday Superannuation) Act 2025 (Cth) and associated legislation, replace the longstanding quarterly superannuation payment cycle with a requirement that it be paid at the same time as wages.

The changes are being described as the most significant overhaul of Australia’s compulsory superannuation system in decades and are intended to reduce unpaid superannuation and improve transparency and enforcement. These reforms are in addition to a suite of other changes made to superannuation regulation in recent years, including the introduction of a right to superannuation contributions in the National Employment Standards and stapled superannuation funds.

Payday Super

The new framework reshapes employer obligations in the following key ways:

• Super paid on payday: Currently, superannuation contributions must be received by a super fund within 28 days of the end of the relevant quarter, but can be paid quarterly or more frequently. From 1 July 2026, employers must ensure SG contributions (12% of qualifying earnings) are paid to the employee’s superannuation fund on payday, and are received and able to be allocated by the employee’s super fund within seven business days. For new employees, or where a new fund is nominated, the first contribution must be made within 20 business days. A contribution that is rejected by a fund due to incorrect information is not considered to have been paid on time, exposing the employer to a shortfall.
• Introduction of “qualifying earnings”: Superannuation is currently calculated based on 12% of ordinary time earnings (OTE). From 1 July 2026, the distinction between OTE and “salary or wages” will be replaced by a unified concept of “qualifying earnings”. The term “qualifying earnings” broadly captures ordinary time earnings, salary sacrifice amounts and certain additional remuneration components, including commissions.
• Restructuring of the Superannuation Guarantee Charge (SGC): The current penalty framework will be revised. The current maximum penalty of 200% of the SGC will be abolished and replaced with a late lodgement penalty of up to 50% of the unpaid SGC.

Further review

The Federal Government has indicated that implementation will be supported by guidance from the Australian Taxation Office, and the operation of the framework will be monitored following commencement. Given the scale of the changes, further clarification and administrative guidance is anticipated prior to 1 July 2026.

Update to modern award default funds

Employers should also note that the Fair Work Commission recently completed a review into superannuation clauses in modern awards, which resulted in default funds listed in many modern awards being updated and corrected. For award-covered employees, employers should review the relevant list of default funds and ensure compliance with award terms.

Key takeaways for employers

Employers should begin preparing for the transition to payday super now, and may decide to implement changes ahead of 1 July 2026. Payroll systems should be reviewed to ensure contributions can be processed and received by the relevant superannuation fund within seven business days of payday. Early preparation will be critical to managing compliance risk once the new regime commences.

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Authored by:

Amanda Junkeer, Partner
Amber Agustin, Partner
Emma Moran, Special Counsel
Olivia Di Sisto, Seasonal Clerk