The government has released draft legislation to mandate payday super, a policy that was first flagged in the 2023-24 Federal Budget.
The draft legislation stipulates that from 1 July 2026, employers must pay their employees’ superannuation at the same time as their salary and wages, which the government said will ensure “workers earn more, keep more of what they earn, and retire with more as well.”
Assistant Treasurer Stephen Jones said that switching to payday super means a 25-year-old on a median income, who currently receives their super quarterly and wages fortnightly, could retire with an extra $6000.
Jones said payday super will make it easier for employers to manage their payroll by aligning super payments with wages. He added the new law will also streamline the way super is paid by employers to help them meet their obligations.
The draft legislation also includes a redesign of the Superannuation Guarantee charge to guarantee workers are compensated for late payments by their employer.
Jones said employers will face tougher penalties for “longer, larger, and repeated failures.”
Notably, the Australian Taxation Office estimates $5.2 billion worth of super went unpaid in 2021-22.
“This change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers, in line with the objective of super,” he said.
The government has opened consultation on the draft legislation, with submissions closing next month.
The Super Members Council (SMC) said payday super laws “will be a gamechanger.”
SMC chief executive Misha Schubert said the payday super laws will make the system fairer for both workers and businesses, so more workers are paid the super owed to them and businesses compete with each other on a level playing field.
“We’ll swiftly work through implementation with other key stakeholders to keep this crucial legislation moving forward and passed,” Schubert said.
The SMC said this reform will mean almost nine million Australians will get their super paid sooner and will also prevent employers being undercut by businesses who deliberately underpay staff.
SMC data also revealed the federal electorates with the worst unpaid super records by the amount of people underpaid, the worst being Lalor in Victoria, with the percentage of people being underpaid being 29%, with an average underpayment of $1520.
