Parliament introduces payday super legislation as new data reveals one-third of SMBs need to build cash reserves to stay solvent.
What’s happening: The Australian government has introduced payday superannuation legislation requiring employers to pay super contributions alongside wages from 1 July 2026. New modelling reveals small and medium businesses face a $124,000 working capital gap to meet these requirements, while 15% remain unaware of the incoming changes.
Why this matters: The reform aims to recover $5.1 billion in unpaid super annually and could add $6,000 to the average 25-year-old’s retirement balance. However, one-third of SMBs say they’ll need to build cash reserves to stay solvent, and more than 20% may alter pay cycles despite employee opposition.
The long-awaited payday superannuation bill has arrived in parliament, bringing with it both promise and concern as businesses prepare for one of Australia’s most significant payroll reforms in decades.
Treasurer Jim Chalmers introduced the legislation in the House of Representatives, marking a key milestone in a policy first announced in the 2023-24 Federal Budget. The reform requires employers to pay superannuation contributions at the same time as wages, rather than quarterly, from 1 July 2026.
The Treasurer told parliament that workers will benefit from more frequent and earlier super contributions that compound over their working lives, with the average 25-year-old worker gaining the equivalent of an extra $6,000 in today’s dollars by retirement.
The cash flow challenge
While industry bodies have welcomed the legislation, new modelling from Employment Hero reveals a substantial financial hurdle for small and medium-sized businesses. The analysis shows a $124,000 working capital gap for SMBs attempting to meet the new requirements.
A survey of Employment Hero customers uncovered further challenges. Fifteen per cent of small businesses remain unaware of the payday super changes, whilst 32.5% say they will need to build cash reserves to maintain solvency under the new system.
More than 20% of businesses indicated they may change their pay cycles to accommodate the requirements, despite 84% of employees opposing such changes.
Ben Thompson, CEO of Employment Hero, said his organisation supports the reform’s intention whilst acknowledging the practical challenges.
“Employment Hero welcomes the introduction of the Payday Super bill to the Australian Parliament. With the 1 July 2026 implementation date fast approaching, this legislation provides much-needed clarity and certainty for Australian businesses preparing for one of the most significant payroll and compliance reforms in decades,” Thompson said.
“Our focus remains on supporting hundreds of thousands of small and medium-sized businesses through these changes with industry-leading technology. We are rapidly developing new solutions within our Employment Operating System to help employers manage Payday Super with ease, accuracy and confidence,” Thompson said.
Workers set to benefit
The Super Members Council has described the legislation as a gamechanger in addressing unpaid superannuation. Data shows unpaid super affects one in four workers across Australia, with $5.1 billion going unpaid for 2.8 million Australians in 2021-22. The average underpayment stood at $1,800 per worker, with a staggering $100 million of super failing to reach workers’ accounts each week.
The organisation’s chief executive, Misha Schubert, said the introduction of payday super legislation has been a long time coming.
The impact will be particularly significant for workers who have been missing their super entitlements. Chalmers noted that in a typical unpaid super case, a 35-year-old worker recovering their contributions could see their retirement balance improve by more than $30,000 in today’s dollars.
Currently, unpaid super is often detected too late. When the Australian Tax Office responds to an employee complaint, it may be investigating two years of unpaid contributions. The Treasurer said the government is investing in the ATO’s capability to detect suspected non-payment of super in real time as part of the reform.
Shane Hancock, AustralianSuper’s General Manager for Retirement, said research shows strong public backing for the change. Recent polling commissioned by the Association of Superannuation Funds of Australia found 80% of respondents agreed super should be paid at the same time as wages.
“For many working Australians, this means their super will be paid earlier and invested earlier, maximising the benefits of compounding growth. Payday super will also help to address issues of unpaid and underpaid super so Australians receive the super they have earnt,” Hancock said.
Industry preparation underway
Superannuation funds have been working for years to prepare for the increased transaction volumes the new system will require. Funds will need to process and invest contributions up to twelve times more frequently than before.
Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia, said the sector has been preparing for this major shift despite the increased administrative burden. She explained that funds will need to process and invest super contributions up to twelve times more often than before, necessitating large amounts of technical preparation by the industry.
The super sector has established a dedicated community of implementation experts convened by ASFA, known as ASFA InPractice, which brings together professionals from super funds, administrators, software providers and regulators. This group has been leading the sector’s preparation for payday super since the policy was announced in the 2023 Federal Budget.
Delahunty described the collaborative preparation process as one of the best Australian examples of an entire industry cooperating towards positive change in recent years. She said funds have been preparing for higher transaction volumes for years and expressed confidence the sector can handle the change cleanly and efficiently.
AustralianSuper, which supports superannuation payments for a significant portion of the workforce, has been developing dedicated resources to help businesses transition. Hancock said the organisation recognises this represents a significant change for employers.
“For business, payday super will be a big change. Our team have been focused on supporting business by delivering compliant, integrated payment technologies and tailored education so they can confidently meet their obligations,” Hancock said.
Seven-day window revised
The legislation reflects a key change advocated for by industry, with the compliance window revised from seven calendar days to seven business days.
Paul Robson, CEO of MYOB, welcomed this adjustment as a commonsense approach to compliance timeframes.
“MYOB advocates for certainty for small and medium-sized businesses, giving them time to adapt to changes and remain compliant. To this end we welcome the clarity and confidence the introduction of the Payday Super Bill gives SMEs, ahead of the new superannuation payment requirements commencing on 1 July 2026,” Robson said.
“We are pleased to see the government has considered industry feedback and taken a commonsense approach to compliance timeframes. Small and medium-sized businesses employ around two-thirds of Australia’s workforce, making their readiness essential to the successful rollout of Payday Super. Empowering these businesses to implement the changes effectively will be key to achieving the Bill’s goals,” Robson said.
MYOB supports superannuation payments for approximately 1.2 million Australian employees through its software. Robson said the company’s digital solutions are ready for SMEs to adapt to the changes and remain fully compliant.
Angad Soin, Managing Director ANZ and Global Chief Strategy Officer at Xero, described the reform as ultimately a commonsense move whilst acknowledging implementation challenges.
“Aligning super contributions with pay cycles is ultimately a common-sense move that promises to improve transparency and help reduce unpaid super. At the same time, we recognise that the proposed changes will result in increased friction for small businesses already facing time, compliance, and financial pressures,” Soin said.
Xero has been dedicating resources to making the transition as smooth as possible, focusing on providing education, tools and support to help small businesses meet new compliance requirements with confidence. The company is actively collaborating with the government, the ATO and industry partners to ensure implementation is fair and practical for both employers and employees.
Superannuation fund Rest said the legislation represents a major step towards fairer super for Australian workers, particularly those in part-time and casual roles. The fund’s chief strategy officer, Tyrone O’Neill, noted the reform will make it easier for members to track their contributions, which is particularly important for those whose working hours vary week to week.
The bill will now progress through parliament, with industry observers watching closely as businesses prepare for the July 2026 implementation date.
For more information on MYOB’s superannuation solutions, please visit: Payday Superannuation: A Complete Small Business Guide
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