Payday Super: Are you ready?

The Payday Super reforms are coming into effect on 1 July, yet, concerningly, nearly half of Australian organisations are not entirely aware of, or do not fully comprehend, how the new frameworks will impact them.

In a recent episode of The HR Leader Podcast, Jerome Doraisamy spoke with Remote’s go-to-market lead for the Asia-Pacific region, Nick Martin, about his background in human resources and how the sector can prepare businesses for the changes and implement practical strategies to ensure a seamless transition and smooth processes moving forward.

From July, Australian employers must pay their employees’ superannuation guarantee contributions at the same time they pay their salary and wages, rather than on a quarterly basis.

As previously reported, a survey of more than 1,000 Australians for the Super Members Council (SMC) found near-universal support for Payday Super, with only 2 per cent opposed, compared to 98 per cent in favour.

However, Martin said a significant number of Australian employers remained unprepared for the introduction of Payday Super, despite the reforms being introduced in a matter of weeks.

“There are actually quite a number of people through some recent surveying that has actually suggested they actually have very little or no idea about what is coming up, which is a little concerning,” Martin said.

He pointed to recent research that revealed widespread knowledge gaps among employers regarding the incoming reforms.

“Forty-one per cent actually lacked a comprehensive understanding of the upcoming changes, 30 per cent were unaware of the reforms, and 11 per cent were aware but didn’t have a clear understanding,” he said.

Martin warned that organisations that had not understood and got themselves comfortable with the changes could face serious consequences once the reforms commenced.

“The ATO has also said, there’s no grace period here … there’s going to be full enforcement from commencement,” he said.

The transition to Payday Super fundamentally changes how businesses operate and manage superannuation obligations, thus creating both administrative and financial burdens.

“Effectively, we are now moving to a new world where all employers in Australia need to pay out the superannuation, guaranteed superannuation, on a per-pay-run basis,” Martin said.

“If we’re now asking organisations to pay on a per-pay-cycle basis, a lot of those cash reserves are obviously going to be used up paying super on a more regular basis.”

Above cash flow apprehensions, Martin said businesses would also need to review how payroll was managed, particularly if they were still relying on manual processes.

“It’s not just the cash flow; it’s obviously getting used to and having systems in place that can allow you to react and not necessarily do things maybe manually like you’re doing currently,” he said.

According to Martin, organisations initially needed to examine whether they were paying super correctly and whether employee records were up to date.

From there, businesses needed to evaluate whether their payroll systems were fit for purpose ahead of the reforms.

While implementing new systems required effort, he stressed that the long-term benefits extended beyond compliance.

“Organisations just need to grasp the fact that things are moving digitally,” Martin said.

Furthermore, he noted that automation and AI-driven payroll solutions streamline administrative tasks and enhance accuracy, enabling HR professionals to prioritise strategic initiatives.

“There’s going to be time that’s going to be freed up for your HR teams to focus on more of the strategic goals and outcomes that the business is looking for as opposed to being stuck in the weeds delivering payroll manually,” he said.

With the 1 July deadline for Payday Super reforms approaching, businesses will need to urgently address knowledge gaps and modernise their payroll systems to ensure compliance and manage the shift in cash flow requirements, with HR being at the forefront of facilitating this change.

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