Industry pushes for payday reform passage amid fears of strain on businesses

Super funds demand fast passage of payday super laws, while small business advocates warn of cash flow pressures and compliance risks.

The superannuation industry has ramped up pressure on Parliament to pass payday super laws this week, saying every week of delay costs workers $110 million in lost retirement savings, even as small business groups caution that the current timeline may be too steep.

The Super Members Council (SMC) has called the long-awaited legislation a “once-in-a-generation” opportunity to stamp out unpaid super, with 3.3 million Australians missing out on $5.7 billion in super contributions in 2022–23.

On average, workers lose $1,730 a year, shortfalls that can leave them up to $30,000 poorer in retirement.

The proposed reform would require employers to pay super at the same time as wages, replacing the existing quarterly system.

SMC CEO Misha Schubert said the change is simple, overdue, and vital for ensuring workers receive what they have earned.

“Every dollar which Australians have earned should be paid to them on time and in full,” Schubert said. 

“This reform will make it easier to detect unpaid super quickly, while levelling the playing field for businesses already doing the right thing.”

Under the plan, payday super would begin on 1 July 2026, followed by a 12-month ATO-administered transition period to help employers adjust.

SMC has also urged the government to revive proposed consumer protections around super fund advertising on employee onboarding platforms.

The group said workers should see their existing fund and their employer’s default option first, alongside a link to the ATO’s YourSuper comparison tool. These safeguards, Schubert said, are essential to preventing duplicate accounts and unnecessary fees.

While bipartisan support exists for the reform, the opposition has flagged amendments that would grant small and medium-sized businesses an extra 18 months to prepare and phase in payments for Australia’s smallest employers.

That call has been echoed by employment management platform Employment Hero, which said the reform must “succeed the first time”, but risks overburdening small businesses without a phased rollout.

Employment Hero CEO Ben Thompson said the average small business will need around $124,000 in additional working capital to meet the new payment schedule, adding that less than a year out, many remain unclear on how to comply.

“The current settings expect employers to bear the full operational and cashflow impacts on day one, while the rest of the system is still being upgraded,” Thompson said. “A short phase-in for the smallest employers and reciprocal obligations on funds would protect both workers’ savings and small business viability.”

Both industry and employer advocates agree the success of payday super will depend on practical implementation, ensuring it delivers on its promise to protect workers’ retirement savings without imposing unsustainable costs on the nation’s small businesses.