Why employers can face Payday Super penalties without underpaying staff

With Payday Super regime kicking off tomorrow, it is imperative that businesses dispel the misconception that making payments alone is sufficient.

From tomorrow (1 July 2026), employers must pay super when they pay salary or wages, and the contributions must reach the employee’s nominated super fund within seven business days of payday, subject to limited exceptions.

The Payday Super regime changes the timing of the legal obligation to make the superannuation contribution, said Thomas Linnane, senior tax lawyer at commercial law firm LegalVision. That is, he noted, “a major shift” from the current framework, where employers are required to make the superannuation contributions within 28 days from the end of each quarter.

In practice, he said, payroll, cash flow, and super processing will need to run together, not as separate back-office processes.

The “biggest misconception” about Payday Super, he told HR Leader, is that paying superannuation entitlements shortly after the payroll cycle will be enough.

“The legal risk turns on when the contribution reaches the employee’s super fund within the required time frame, not merely when the employer initiates payment. Businesses should consider timing when making superannuation guarantee contributions, including the impact of weekends, public holidays, and/or the use of a commercial clearing house, which can delay the time between a payment being made and a superannuation fund receiving it,” he said.

“A business that keeps paying super quarterly will have repeated super guarantee shortfalls from the first missed payday deadline. That will trigger the superannuation guarantee charge, even where the business eventually pays the correct amount before the old quarterly deadline.”

“The surprising consequence is that a business can be non-compliant without underpaying the final dollar amount.”

“Timing becomes the breach, and businesses might find themselves in a position where they could have to pay contributions twice.”

Linnane also reflected on the hidden cash flow impacts of the new regime for SME businesses across the country.

A fundamental policy reason for the introduction of Payday Super, he said, was to mitigate the risk for all businesses, including SMEs, of relying on their unpaid superannuation guarantee contributions to increase cash flow.

“Without proper management, businesses failed to set aside enough money to meet quarterly contribution due dates, which in turn led to employees not receiving superannuation and to businesses falling into financial difficulty and sometimes insolvency. This could also lead to personal liability for directors through director penalty notices,” he said.

“The businesses most exposed are those still relying on their employees’ superannuation to increase cash flow, as well as those who still use manual payroll processes, older accounting systems, external bookkeepers or end-of-quarter cash flow habits.”

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Jerome Doraisamy

Jerome Doraisamy is the managing editor of Momentum Media’s professional services suite, encompassing Lawyers Weekly, HR Leader, Accountants Daily, and Accounting Times. He has worked as a journalist and podcast host at Momentum Media since February 2018. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.