What the looming advent of Payday Super means for SME employers

From 1 July 2026, Australia’s superannuation landscape will undergo one of its most significant reforms in decades: the introduction of Payday Super. 

Employers will be required to pay super contributions to their employees’ funds within seven days of payday, a change designed to improve retirement outcomes by ensuring contributions reach accounts faster.

But as Richard Webb, Superannuation Lead at CPA Australia explains, the reform is not just about deadlines. It is about understanding the hidden mechanics of how contributions move through the system and ensuring businesses are prepared for the operational realities.

The clearing house bottleneck

Currently around 250,000 Australian small-to-medium businesses use the government’s free Small Business Superannuation Clearing House (SBSCH) to pay their employees’ super. However, this service will be closed on 1 July 2026, which will mean all businesses using the SBSCH should be looking for a new clearing house service provider as soon as possible.

Furthermore, with the advent of Payday Super, even businesses already using a private clearing house should be reacquainting themselves with their existing clearing house arrangements. 

“For some, it’s been years since they spoke to their provider,” Webb says. “Now is the time to ask: how long does it take for contributions to go through?

“When employer hits send, the money doesn’t go straight to the super fund. It first goes to a clearing house, where two things happen. There’s a reconciliation between the amount of money received and the documentation, which comes in the form of SuperStream messages. 

“Then, once everything adds up, the clearing house does a big data transformation and sends the right amounts off to each fund.”

This process, while invisible to most employers, introduces delays. Webb notes that clearing houses typically hold funds for at least three business days, especially when direct debit is used.

“Direct debits have a dishonour period, a bit like how cheques used to work. So, clearing houses need to hang on to the funds for a little bit,” he explains.

That means that nearly half of the seven day window under Payday Super could be consumed before contributions even leave the clearing house. 

“Businesses need to be mindful of how long it takes to send a contribution through to the time the super funds actually receive it,” Webb warns.

Timing is critical

Andrew Callus, Chief Product Officer at clearing house provider SuperChoice, says businesses that use a digital service provider (DSP) to run their payroll should check if their provider offers a service to meet their contribution obligations.

“With the implementation of Single Touch Payroll in 2018, the number of employers using a DSP to fulfill their obligations has increased. By and large, these employers should be able to find a DSP that provides a similar service to the small business clearing house, often built right into their software.

“Time is critical here. There’s only about six months to go until the Australian Taxation Office (ATO) stops providing that service, and it’s a tricky time of year because 30 June is the last date it will be active,” Callus warns. 

“If employers are paying their staff quarterly, those 30 June contributions aren’t due until 28 July. Employers will probably need to make a switch earlier rather than later.

“Quarterly employers should get familiar with whatever system they choose. Their April contributions will probably be the last they can submit on the small business clearing house if they stick to quarterly submissions in advance of payday.”

The importance of error messages

Perhaps the most overlooked issue is data integrity. Webb warns that many small business payroll systems only meet the bare minimum requirements and may not support error messages.

“It’s vitally important that employers get error messages back,” he says. “If a contribution is rejected at the super fund, it’s usually because the data isn’t quite right. The best way to fix it is to have an error message telling them what the issue was. Without that, they’re flying blind.”

New message types are being developed to allow employers to verify employee super fund details in advance. Webb advises businesses to check with their payroll providers whether their systems can send and receive these messages. 

“Your payroll solution vendor should be able to tell you how to receive error messages that relate to your contribution data,” he says.

Callus adds that the ATO and industry are implementing improved error messaging from early 2026 as part of enhancements to SuperStream.

“When a super fund needs to send error messages back to an employer, there’ll be an improved standard, so employers can understand and act on the feedback,” Callus explains.

“These changes will be in place before 1 July 2026, so employers can get used to what these error messages look like and what they mean for their business processes. It’s important that employers use a service that provides these error messages, so they can take action. In a payday world, with the seven-day business rule, having a solution that returns error messages as soon as they’re available is critical.”

Callus emphasises the importance of data quality: “When an employer submits a contribution via a clearing house, the information should be validated and confirmed upfront to avoid getting an error message back from a super fund. We try to keep our error rates as close to zero as possible. 

“Employers should also think about their onboarding processes — making sure data is validated and captured correctly when onboarding new employees. That way, contribution processing is smooth, and refunds from super funds are minimised.”

With Payday Super looming, businesses cannot afford to be complacent. Whether it’s checking processing times, confirming error message capability or reviewing fee structures, the message is simple: do your homework now or risk falling foul of the new regime.