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Draft legislation that will require super to be paid at the same time as wages has been released for consultation.
Government unveils draft legislation for payday super
14 March 2025
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8 minute read
Assistant Treasurer and Minister for Financial Services Stephen Jones has released draft legislation for payday super, which will aim to substantially reduce the billions of dollars in unpaid super every year.
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The reforms, which commence on 1 July 2026, will require employers to pay their employees' super at the same time as their salary and wages.
The proposed legislation introduces a new term, qualifying earnings, which is the amount of earnings an employee is paid on which individual SG amounts are calculated.
Qualifying earnings use the existing earnings base for contributions under the current law, currently called the OTE base.
Qualifying earnings will consist of:
• OTE as it is defined and calculated under the current SG framework.
• Amounts of OTE that have been sacrificed in exchange for an additional superannuation contribution under a salary sacrifice arrangement; and
• Payments that were expressly included within ‘salary or wages’ under the existing law for arrangements that fell within the extended meaning of employee for the Superannuation Guarantee (Administration) Act.
The day that qualifying earnings are paid to an employee will be referred to as a QE day under the proposed legislation.
Under the amendments, superannuation guarantee (SG) contributions will need to be received by the superannuation fund within a specified period, which will usually be seven days from the day on which employees are paid their qualifying earnings.
The amendments also update the calculation of the SG charge and impose a late payment penalty when the SG charge remains outstanding after a specified period.
"A recalibrated calculation of the SG charge will better ensure employees are accurately compensated for lost earnings if their contributions are delayed," the explanatory memorandum read.
"It will prompt employers to immediately rectify any late or missed payments and deliver more significant consequences and penalties for ongoing and repeated non-payment of the SG charge."
Minister Jones said payday super would make it easier for employers to manage their payroll by paying super at the same time as salary and wages.
"The new law will also streamline the way super is paid by employers to make it easier to meet their obligations," he said.
"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."
Minister Jones said that by switching to payday super, a 25‑year‑old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement.
The government is inviting submissions on the draft legislation, with consultation closing on 11 April 2025.
Mary Delahunty, chief executive of ASFA, welcomed the release of the draft legislation and said the reforms would ensure that workers don't miss out on the benefits of compounding investment returns through more frequent contributions.
“Payday super means over three million workers will see their super build in real-time, alongside their wages," she said.
"It will mean less lost super and better outcomes in preparation for retirement. We are sure that this change will encourage people to engage more regularly with their retirement savings."
The superannuation industry body said it was committed to ensuring that payday super is not only implemented in an orderly and controlled manner but also delivers real benefits for Australians’ retirement outcomes.
"We look forward to engaging in the Treasury consultation process over the coming weeks and working through the detail so that this important reform can be implemented by 1 July 2026," Delahunty said.
“Our focus is on making sure that these changes translate into meaningful improvements for workers’ futures, providing the comfortable and secure retirement they’ve worked hard for and deserve."
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