Payday Super has changed how often employers need to pay super, and how little room there is left for delay. Contributions now need to be received by an employee’s super fund within 7 business days after payday, instead of once a quarter. For a business used to a single quarterly deadline, this is a genuinely different rhythm, and the margin for error is much smaller. Here is a practical checklist to help you stay ahead of it.
What changed
Super guarantee must now be paid, and received by the fund, within 7 business days after each payday, instead of quarterly.
New employees, or an employee who changes their super fund, generally get a longer window of 20 business days for the initial contribution.
Funds themselves now have only 3 business days to allocate or reject a payment once they receive it, which means errors get flagged much faster too.
It is worth understanding what counts as ‘qualifying earnings’ under the new system, since this is the figure super is now calculated on. Qualifying earnings bring together an employee’s ordinary time earnings, any commissions, amounts they have salary sacrificed to super, and certain other payments that were not always captured consistently under the old quarterly system. If your payroll software has not been updated to correctly calculate qualifying earnings, that is worth checking before your first payday under the new rules.
Your 7 business day checklist
- Use the member verification request (MVR) before you pay. This lets you confirm an employee’s super fund details are valid, and that the fund can accept the contribution, before you send the money. This is particularly useful for new employees, or whenever an employee tells you they have changed funds.
- Check with your payroll provider or clearing house that they are actually responding to MVRs, not just submitting them. Not every system handles this automatically, and a request that goes unanswered can leave you assuming a fund is ready to accept a payment when it is not.
- Monitor every payment after you send it, rather than assuming it has gone through. Funds have only 3 business days to allocate or reject a contribution, so a rejection can appear quickly, and it is far easier to fix within the 7 day window if you catch it early.
- Act fast on rejections. If a payment is rejected or returned, correct the error and resubmit to the right fund straight away, since there is no extension to the 7 day deadline just because a payment bounced.
- Build in a buffer. If you use a clearing house, submit payments on payday itself, or even the day before if your systems allow it, to leave room for normal processing time before the clock runs out.
What counts as a business day
The 7 day countdown is measured in business days, not calendar days, which generally excludes weekends and public holidays.
This means the practical deadline can fall later than 7 calendar days after payday, particularly around long weekends, but it also means the countdown can move faster than expected in a short working week. Building a small buffer into your payroll calendar, rather than calculating the deadline manually each time, is the safest way to avoid an accidental miss.
What happens if you miss the deadline
Missing the deadline can trigger the super guarantee charge, which works very differently to simply paying the super a little late.
The charge is calculated on your employee’s full salary and wages, not just their ordinary time earnings, includes interest, adds an administration fee per employee, and is not tax deductible, unlike a normal super contribution. In other words, a late payment can end up costing considerably more than the super contribution itself would have.
Why the old quarterly system caused problems
Payday Super was not introduced for its own sake. Under the old quarterly system, unpaid or underpaid super could go unnoticed for months, since an employee often would not realise a contribution was missing until well after the quarter had closed, by which time chasing it down was harder for everyone involved.
Aligning super with each payday means both employers and employees can see contributions moving in close to real time, which makes errors far easier to catch and correct while they are still small.
Getting your systems ready
Beyond the day to day checklist, it is worth doing a broader systems check before you rely on Payday Super running smoothly. This includes confirming your payroll software has been updated to calculate qualifying earnings correctly, checking that your default fund and any employee elected funds are still active and able to receive SuperStream payments, and reviewing how your business would handle a rejected payment outside normal business hours, such as over a long weekend.
A short conversation with your payroll provider now is far easier than untangling a missed deadline after the fact.
Quick facts
- Standard deadline: 7 business days after payday
- New employee or fund change: 20 business days for the first payment
- Fund’s response time: 3 business days to allocate or reject a contribution
- Qualifying earnings: brings together ordinary time earnings, commissions, and salary sacrificed super into one calculation
- First year: the ATO has said employers who genuinely try to comply will not be the focus of compliance action
Frequently asked questions
Q. What if my payroll provider handles all of this automatically?
Many do, but it is still worth confirming exactly what your provider covers, particularly around member verification requests, since not every system submits these by default.
Q. Does the 7 day rule apply to all employees?
It applies to ordinary employees and to independent contractors who are entitled to super under the extended definition of employee. New employees, or employees who change funds, generally have a longer 20 business day window for the first payment.
Q. Is there any leniency in the first year?
The ATO has indicated that employers who are genuinely trying to comply will not be the focus of its compliance action during the first year of Payday Super, but this is not a free pass to ignore the deadline altogether.
Sources
ATO, Top tips to meet the Payday Super 7 business day timeframe: https://www.ato.gov.au/businesses-and-organisations/business-bulletins-newsroom/top-tips-to-meet-the-payday-super-7-business-day-timeframe