Payday Super is here: how to make sure your super reaches employees within 7 business days

The rule is not that employers have seven business days to start paying super.

The contribution generally needs to be received by the employee’s super fund within the applicable timeframe.

That means processing time matters.

If your clearing house takes several business days to process a contribution and you wait until the end of the seven-day period to submit it, the contribution may arrive late.

For most employers, the safer approach is to make super part of the payroll process rather than something dealt with several days afterwards.

The simplest operating process is to deal with super when the wages are processed.

If employees are paid weekly, super should become part of the weekly process.

If employees are paid fortnightly, it should form part of the fortnightly process.

If employees are paid monthly, it should form part of the monthly process.

Under the old quarterly system, a business might have:

• processed wages throughout the quarter
• accumulated the super liability
• paid it later

That habit no longer suits Payday Super.

A better process is: run payroll → confirm super → submit super → check that it was received.

The fewer separate steps there are, the less opportunity there is for a payment to be forgotten.

Your business should understand how super moves from payroll to the employee’s fund.

Ask:

• When does the money leave our bank?
• When does our clearing house receive it?
• How long does the clearing house take to process it?
• When does the super fund receive it?
• How quickly are we notified when something fails?

Do not assume that because money has left the business bank account it has already reached the employee’s super fund.

If your business uses payroll software or a clearing-house provider, ask them directly: how many business days does it normally take from approving the payment until the employee’s super fund receives the contribution?

You should know the answer.

A contribution can fail for relatively simple reasons.

These may include:

• an incorrect member number
• incorrect fund details
• a closed super account
• an employee changing funds
• incorrect personal information
• incorrect SMSF details
• a fund being unable to accept the contribution

Under Payday Super, super funds have 3 business days to allocate or reject a payment, so a rejection can land well inside your seven-day window.

Do not leave rejected contributions sitting in an inbox until the next payroll run.

The ATO’s guidance is to review the error message, correct the missing or incorrect details and resubmit to the correct fund. In most cases you do not need to contact the fund first.

A rejected payment does not necessarily give the employer a completely new statutory timeframe.

The original obligation still needs to be dealt with.

Processing super early gives the business more time to identify and correct problems.

Payday Super makes accurate employee information more important.

When someone starts with the business, make sure the information required to process super is collected promptly and correctly.

This may include:

• employee name
• date of birth
• tax file number where relevant
• nominated super fund
• member number
• fund identifiers
• SMSF information where relevant

There is also a new member verification request, or MVR, which lets your payroll software or clearing house check that a fund’s details are valid and that the fund can accept a payment. The ATO suggests using it before paying a fund for the first time, when employee details change, or after a payment has been rejected. Not every fund is responding to MVRs yet, so check with your provider first.

Do not wait until the first super contribution is due to discover information is missing.

Employee onboarding should include a clear process for collecting and checking super details.

The standard Payday Super timeframe will generally be seven business days.

Longer periods may apply in specific circumstances. For a new employee, or the first payment to a particular super fund, the ATO currently allows 20 business days for that initial contribution.

Do not assume an exception applies.

Where the business is relying on a longer payment timeframe, confirm the rule before using it.

The normal operating process should still be to submit super promptly rather than deliberately using the maximum available period.

Payday Super is not simply a change in payment timing.

Employers should also make sure the payroll system is configured correctly for the new rules.

Review:

• wage categories
• allowances
• commissions
• bonuses
• salary sacrifice
• overtime and other payments
• payroll adjustments
• relevant contractor payments
• year-to-date information
• super fund details

It is also worth confirming that your payroll product supports Payday Super. Providers are still updating their software, and the ATO publishes a register of SuperStream-certified products.

Payroll software performs calculations based on how it has been configured.

Automation does not guarantee that the underlying setup is correct.

Having an ABN or issuing an invoice does not automatically mean someone falls outside the Superannuation Guarantee system.

Some contractors may still be treated as employees for SG purposes depending on the arrangement.

If your business uses contractors, consider:

• who actually performs the work
• whether the person is engaged primarily for their labour
• what the contract says
• how they are paid
• whether an SG obligation may exist

Where the position is unclear, obtain advice rather than relying only on the existence of an invoice.

Not every wage payment happens in the normal payroll run.

Businesses may also make:

• bonuses
• commissions
• back pay
• corrected wages
• termination payments
• adjustments
• other out-of-cycle payments

These payments should be reviewed for Superannuation Guarantee implications.

Your payroll process needs to identify when an out-of-cycle payment creates an additional super obligation.

Do not assume it can simply be dealt with during the next normal reconciliation.

The Payday Super timeframe is measured in business days.

Weekends and relevant public holidays may affect the calculation.

However, the business should not build its payroll process around calculating the last possible day every time wages are paid.

A much safer process is to submit super with payroll and use the statutory deadline as the backstop.

This creates room to deal with:

• rejected payments
• clearing-house delays
• incorrect fund information
• bank-processing issues

Under Payday Super, waiting until quarter-end to reconcile super is no longer a sensible control.

After each payroll run, the business should be able to answer:

• What super was calculated?
• What amount was submitted?
• What amount reached the super funds?
• Were any contributions rejected?
• Is anything still outstanding?

A basic process may include:

• Review the payroll super liability.
• Confirm the contribution batch.
• Confirm the payment was processed.
• Review exceptions or rejected payments.
• Correct any problems promptly.
• Reconcile the remaining super liability.

If the super payable account continues increasing despite regular payments, investigate why.

This is one of the most important commercial changes for employers.

Under the old quarterly system, some businesses effectively retained employee super obligations for several weeks before paying them.

That cash-flow buffer has largely disappeared.

If a fortnightly payroll includes $100,000 of wages and $12,000 of associated super, the business needs to think about the cash requirement for the pay cycle as more than simply the net wages transferred to staff.

Payroll cash planning should consider:

• net wages
• PAYG withholding
• super
• payroll tax where applicable
• other employment costs

This should flow into:

• cash-flow forecasts
• minimum bank balances
• debtor collection
• payroll approval processes
• weekly cash reviews

If the change to Payday Super is creating cash-flow pressure, that should be discussed early.

It may reveal that the business had been relying more heavily on quarterly super timing than the owners realised. Our note on the real reason cash-flow pressure builds covers what usually sits underneath it.

Every business should be clear about who is responsible for Payday Super.

That includes:

• who prepares payroll
• who approves payroll
• who submits super
• who checks whether it was received
• who monitors rejected contributions
• who contacts employees when details are incorrect
• who reconciles the super account
• who escalates a problem

The process also needs to work when the usual payroll person is sick, on leave or otherwise unavailable.

A seven-business-day statutory timeframe gives less room for an unresolved task to sit unattended.

If a contribution does not reach the employee’s super fund within the applicable timeframe, do not wait until the end of a quarter to investigate it.

Work out:

• which payday was affected
• which employees were affected
• how much should have been paid
• when the contribution was submitted
• when it was actually received
• why it was late
• whether any further reporting or Superannuation Guarantee Charge obligation arises
• what process needs to change

The earlier the issue is identified, the easier it is to determine what needs to happen next.

Missed the final quarterly super deadline? Read what employers need to do before the SGC deadline.

Where there is uncertainty, contact Wakefield Pacific rather than assuming the late contribution has fixed the problem.

The seven-business-day requirement should be manageable for a business with a reliable payroll process.

But it leaves less room for:

• incomplete employee details
• delayed approvals
• forgotten payments
• manual processes
• clearing-house delays
• unresolved rejected contributions

The simplest way to think about Payday Super is: when wages are processed, super needs to move as well.

Then check that it actually arrived. That kind of ongoing check-in is part of how we work with business owners through the year, alongside our other services.