Payday Super: A Comprehensive Guide

What is payday super? It may be your ticket to a smoother payroll, happier employees, and a more stress-free financial future. Payday super is a paradigm shift in how we approach superannuation and requires employers to pay employees superannuation entitlements on the same day as their regular pay. It emerged as part of Australia's ongoing efforts to streamline superannuation processes and enhance retirement savings for workers.

Understanding Payday Super

What is Payday Super?

Payday super is the requirement to pay your employees their superannuation entitlements on the same day as their regular pay, replacing the current requirement of paying them quarterly. It also requires employers to report their employees’ superannuation contributions in line with their payroll.

Payday super brings the gift of immediacy, instead of waiting to align your employees' super contributions every quarter. It’s not just about speed; it’s about flexibility too. By integrating super contributions into regular payroll processes, businesses can tailor their financial strategies more dynamically.

The Importance of Payday Super for Employers and Employees

Employees

Payday superannuation helps ensure every Australian worker is building their nest egg for the future. It can provide greater visibility of superannuation contributions and make it easier for employees to keep track of their super contributions. Earlier payment of superannuation means there is also greater potential for generating earnings on those contributions over a period of time.

Employers

Whether it’s adjusting contributions based on fluctuating cash flow or aligning payments with seasonal peaks, payday super gives employers the agility to adapt and thrive in a variety of economic climates. It means businesses can sidestep the headache of reconciling quarterly contributions against ever-changing regulations by staying on top of super payments in real-time, and it may help employers avoid penalties and fines.

Payday Super Legislation

Key Regulations Governing Payday Super

In Australia, employees are entitled to a Super Guarantee (SG). Under this scheme, employers are required by law to contribute a percentage of their employees' ordinary time earnings into an employee’s superannuation fund of choice. Currently, these entitlements are paid quarterly. From July 1, 2026, employers will be required to pay their super entitlements at the same time as their regular pay.

Compliance and Reporting Requirements

Payday super legislation will require employers to report and remit information about super contributions in line with payday. From 2023 the ATO is investing in a new database designed to match Single Touch Payroll data from employers to the transaction data of nominated superannuation funds.

How will payday super changes affect employers?

With payday super changes on the horizon, employers will need to adjust their payroll processes. That means updating payroll systems to seamlessly manage and transfer super funds with each payday. 

Employers will also need to regulate their cash flow to accommodate more frequent super contributions. Some businesses may find this difficult as they adapt to the new rhythm of payday super but there is a generous time frame in place before payday super becomes law. It's crucial to use the right software and seek advice from trusted experts. 

Why was payday super proposed?

Payday super was proposed primarily to help deliver a more dignified retirement to Australian workers with earlier payment of superannuation expected to significantly improve the retirement incomes. There are also many additional benefits to real-time superannuation payments for both employers and employees. They include:

• Helping to maximise the value of an employee’s superannuation earnings.
• Giving greater visibility to employees of their superannuation earnings and allowing them to keep track of their super contributions. 
• Helping ensure a smoother payroll management system for employers and reducing the likelihood of having superannuation liabilities.
• Helping employers avoid heavy fines and penalties for non-compliance with quarterly regulations.
• Helping to reduce the amount of unpaid super in Australia.
• More immediate reporting on superannuation contributions will help identify employers that may be dodging superannuation payments.
• Encouraging higher national savings which may lead to higher employment growth and higher standards of living in Australia.

The Current Payday Super Timeline

From July 1, 2026, employers will be required to pay their super entitlements at the same time as their employees’ regular pay. You may wish to integrate payday super into your payroll systems earlier than this date. To prepare for payday super employers should:

• Assess current payroll processes and update systems to implement any necessary changes.
• Communicate and outline the transition to payday super with employees, addressing any questions or concerns. 
• Seek advice from payroll experts to ensure compliance and smooth implementation.

Leveraging foundU for Streamlined Payday Super Management 

Whether it’s managing the change to payday super, employee onboarding, or tracking PAYG tax, foundU is empowering employers to support their workers' financial futures with speed, flexibility, and compliance. Our all-in-one payroll software is built for Australia and is the smart choice for managing payday super. Our easy-to-use interface offers seamless integration with the Australian Taxation Office (ATO) and super systems with real-time reporting features and automated capabilities. foundU Payroll Management system is a fuss-free solution for the change to payday super.

Key Features That Simplify Payday Super

Adopting the right workforce management software not only simplifies the management of payday super but also ensures compliance with the ATO, reduces administration and helps enhance clarity for both employers and employees. By staying on top of super payments in real-time, employers can avoid penalties and fines. foundU Payroll Management software offers:

• Easy-to-use interface
• Drag and drop scheduling 
• Seamless integration with Australian tax and super systems
• Real-time reporting features and automated capabilities
• Proactive assistance with platform changes to ensure compliance

Payday super is expected to be a seamless blend of payroll and super contributions that ensures every Australian worker is building the best nest egg possible for their future. Streamlining payroll and superannuation processes isn't just about ensuring financial security and peace of mind for employees, it’s also simplifying administrative burdens for employers.