Payday Super has passed Parliament with a July 2026 start date. Small businesses face a 60% penalty for delays
What’s happening: The Payday Superannuation Bill has passed Parliament and will require employers to pay super within seven days of payday from 1 July 2026. Small businesses face a 60% penalty for administrative delays and need up to $124,000 in additional working capital to comply.
Why this matters: Hundreds of thousands of small businesses must migrate off the ATO’s clearing house by July whilst navigating a three-day bank transfer lag that puts them at risk of penalties. Without real-time payment infrastructure, many employers won’t know they’ve breached the rules until it’s too late.
The Treasury Laws Amendment (Payday Superannuation) Bill has cleared Parliament, setting the stage for a major shift in how Australian businesses pay superannuation from 1 July 2026.
The new laws require employers to pay super within seven days of payday, a change welcomed by the superannuation industry but creating significant compliance challenges for small and medium businesses.
Law passes Parliament
The Association of Super Funds of Australia described the passage as a game-changing reform for fairness and Australian workers’ retirement outcomes. Australian Unions similarly welcomed the legislation, noting it will make super theft more visible and ensure workers benefit from compound interest sooner.
“Payday super means millions of workers will retire with tens of thousands of dollars more in superannuation, not just by reducing super theft, but by earning faster and more compound interest from their super,” said ACTU Assistant Secretary Joseph Mitchell.
Research by the Super Members’ Council shows that almost one in three workers in their 20s and 28 per cent in their 30s have had their super stolen. Super theft currently strips $5.7 billion from 3.3 million workers, disproportionately impacting young workers, women, migrant workers and those in insecure jobs.
AustralianSuper Chief Member Officer Rose Kerlin said the legislation means super will be paid 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,” Kerlin said.
Compliance risks mount
Whilst the industry celebrates, small businesses face a steep compliance challenge. Employment Hero CEO Ben Thompson highlighted that the Bill expects perfect execution from day one, even whilst parts of the ecosystem are still in transition.
“Right now, the Bill expects SMBs to Payday Super right on day one, even while parts of the system that employers rely on are still being upgraded. At the same time, hundreds of thousands of SMBs will need to move off the ATO’s Small Business Superannuation Clearing House (SBSCH), set to close 1 July 2026,” Thompson said.
Small businesses face a 60% administrative uplift penalty for delays, even those outside their control, whilst other industry players like funds and gateways do not have the same legislated responsibility. Thompson noted the average SMB will face a $124,000 cashflow impact on day one.
The core technical problem is that existing bank transfers can take up to three business days, creating silent delays and error loops that put employers at risk under the seven-day rule. Without automation and live status updates, many employers won’t know they’ve fallen foul of the rules until it’s too late.
Tech solution emerges
In response to these challenges, Employment Hero has partnered with account-to-account payments provider Zepto and superannuation messaging provider OZEDI to build a first-of-its-kind solution called HeroClear.
The tool, set to launch in Q1 2026 ahead of the reform, removes the manual steps and delays that currently sit between payroll and super funds. It gives employers a clear proof-of-payment trail within the seven-day window.
HeroClear will use OZEDI’s SuperStream connection to verify fund details before payment, and Zepto’s real-time payments capability, leveraging Australia’s New Payments Platform fast payments infrastructure, to move contributions instantly. These functions will sit inside Employment Hero’s payroll system, so employers do not have to use separate clearing houses or banking portals.
“We continue to advocate for a short phase-in for SMBs and legislated obligations on other industry parties like funds and gateways, but we’re also building the solutions to make compliance practical even before the 1 July deadline,” Thompson said.
“By validating fund details up-front, moving money in real-time, and providing live confirmations and a single audit trail, SMBs will see fewer errors, faster settlement and clear proof of action to meet new requirements. That means better outcomes for business and employees alike.”
Chris Jewell, President and Co-Founder at Zepto, said Employment Hero is showing what’s possible under the new Payday Super framework. “After processing Australia’s first real-time super payment with OZEDI in 2023, we’re proud to extend that innovation through this partnership with Employment Hero,” Jewell said.
David Field, Director at OZEDI, noted the industry-wide process has remained largely unchanged for more than a decade. “The integration of OZEDI’s services with Employment Hero’s advanced technology and vision plus Zepto’s NPP payment services has created a benchmark for the industry,” Field said.
Working capital crunch
Beyond the technical challenges, small businesses face a significant working capital impact. The shift from quarterly to payday super payments means businesses must fund super contributions more frequently, requiring up to $124,000 in additional working capital for the average SMB.
Instead of separate systems, clearing houses, payment portals and manual uploads that accumulate costs and admin, HeroClear will be the only end-to-end automated workflow inside payroll. The platform will track each step from payment to settlement, including any errors or refunds and validation, all within one system.
AustralianSuper’s Kerlin acknowledged the change will be significant for businesses. “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.
The partnership supports the core policy goal of Payday Super, improving retirement outcomes for Australians, whilst helping ensure businesses can meet the new requirements from day one.
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