what is payday super?

Jason: Hello and welcome to HESTA’s podcast on Payday super for employers.

I’m Jason Waterford, National Manager of Business Development and today, together with some HESTA experts, I’m going to unpack what Payday Super means for you and your business, including four essential steps you need to take to get ready.

So, let’s get started with what Payday Super is all about:

From 1 July 2026, all employers will be required to pay employee superannuation guarantee (SG) entitlements at the same time as they pay wages. This is a big change for many employers, as currently you can decide to pay SG contributions at a minimum frequency of once a quarter.

Now, to help us understand the background as to why the Government is introducing Payday Super, today I’m joined by HESTA’s Policy and Advocacy Manager, Charlotte Ahearne. And to discuss the key changes being introduced and what they will mean for employers, I’m also joined by Jenny Lang, General Manager of Finance & Procurement at HESTA

Firstly let’s kick off with Charlotte, about the purpose and objective of Payday Super and why we think it’s likely to make a positive difference to workers’ retirement savings.

Hi Charlotte – thanks for joining us today.

Charlotte: Pleasure, Jason.

Jason: From HESTA’s perspective, what makes Payday Super such a crucial reform for our superannuation system?

Charlotte: Payday super will do two things:

First, from a system-perspective, it will make it harder for employers to avoid their legal obligation to pay super to their workers. Australians miss out on a staggering $5.7 billion[1] in retirement savings every year because of unpaid super! So reducing the timeframe for paying workers' super helps level the playing field for those employers doing the right thing and, most importantly, ensures that all workers get paid their fair entitlement.

It also encourages employers to adopt modern, automated systems for payroll, which complements recent reforms like Single Touch Payroll and the New Payments Platform.

Secondly, and perhaps most importantly, workers’ super balances will benefit from the power of compound interest because their super will be paid into their account sooner and more regularly.

Jason: So that tells me that this change will improve workers’ retirement savings. Are there any groups in particular who are likely to benefit from the change?

Charlotte: Well unfortunately we know that unpaid super disproportionately impacts women. Research by Super Members' Council shows us that young, low-income women are the worst hit by unpaid super. So you can see it really matters to our members, who are around 80% women, but of course it’s a win for all working Australians. And to give the listeners a sense of how much difference it’ll make, Treasury has estimated that a 25-year-old median income earner currently receiving their super on a quarterly basis could be around $6,000 better off at retirement² just from being paid their super at the same time as their wages.

Jason: Thanks Charlotte, that really gives us a good idea of how Payday Super is intended to help improve the super system to benefit Australian workers.

Now Jenny, as the person at HESTA that oversees our payroll each fortnight – you have unique insight into both the complexities and pressures of meeting pay runs. Given many of our employer partners in the health and community services sector have a highly casualised workforce, with could lead to higher staff turnover than other sectors. No doubt our employer partners are interested to know how Payday Super is going to affect them and what they need to do to get ready for this change. Are you able to give us some insights into what employers need to be aware of?

Jenny: Absolutely, thanks Jason. As a reminder, Payday Super is slated to begin on 1 July 2026, will require employers to move from minimum quarterly superannuation payments to alignment of super payments with regular pay cycles and to be more specific, super guarantee contributions will need to be received by employees’ super funds within seven business days of each payday.

So two of the key considerations for employers will be:

1. First, making sure their payroll processes and payroll software can accommodate the change in frequency of super payments.  
2. And secondly, to consider the impact on the business’s cash flow. We expect for a lot of employers, once they’re in a rhythm, the more frequent payments will be easier to handle, but initially it could be an uneasy transition, particularly for smaller businesses who need to consider available cash reserves.

Jason: So with these considerations in mind, what are some of the things employers need to do to prepare?

Jenny: There are four key steps you need to take and these may be referred to as the golden rules.

Firstly, start documenting current super payment processes to identify areas requiring change.

Second, review, update and provide assurance that current payroll systems can handle same-day super payment rules.

Next, you’d consider any impact on cash flows to enable meeting the new requirements.

And lastly, consider staff training needs for how you calculate super including consideration of how you approach matters like the Maximum Super Cap, along with aforementioned potential changes to systems and processes. 

In summary, people, process, systems and cash management.

But of course, this isn’t an exhaustive list, so employers need to make sure they’re across the details and consider all the needs of their particular business.

Jason: And you mentioned, Jenny, Super Guarantee payments have to be received within 7 business days of payday. What are the proposed penalties for non-compliance with the new rules?

Jenny: You definitely need to know what’s at stake if you miss a payment after Payday Super comes in.

Starting July 1 2026, if you miss paying super into the employee's fund within 7 business days of payday, you face the Superannuation Guarantee Charge (SGC), which has three main components:

First, the Unpaid Super Amount, being the original amount of super.

Secondly, Compounding Daily Interest, so the interest actually starts ticking every single day you're late.

And thirdly, a fine, which is referred to as an administrative uplift. But it’s basically a penalty of up to 60% of the unpaid super amount.

If the ATO assesses your super guarantee charge and you still don't pay within 28 days, you get hit with an additional penalty of up to 50% of the outstanding amount.

Something important to note: The penalties and interest after assessment of super guarantee charge by the ATO are not tax-deductible, making every dollar of the fine a very expensive error.

However, the government is indicating that the ATO will adopt an education approach during the initial transition period. Any enforcement action would be proportionate to the scale of the wrongdoing in the early stages.

Jason: Thank you so much for joining us today Charlotte and Jenny. Your insights have really set the scene for why Payday Super is being introduced and what employers need to do to prepare.

Listeners, as your superannuation partner, we’re committed to bringing you further updates in the coming months on the key payday super changes.

Meanwhile, if you have any questions about any of the information we touched on today, please visit our website at hesta.com.au/payday-super

And just before we sign off, I do quickly need to mention that this podcast contains general information only and does not constitute legal advice. It does not cover all your obligations under Payday Super requirements. For further information, visit ato.gov.au.

Thanks very much for joining us.

H.E.S.T. Australia Ltd is not liable for any non-compliance or related consequences.

¹ “Payday super laws a long time coming: let’s get it done” https://smcaustralia.com/news/payday-super-laws-a-long-time-coming-lets-get-it-done/ 15/10/25

² “Consulting on payday super draft legislation”https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/consulting-payday-super-draft-legislation