The federal government has released details of its payday super reforms, including worker compensation for late payments and penalties for excessive delays.

Employers who lodge superannuation contributions into employees’ funds more than seven days after payday will face additional charges and penalties from July 1, 2026.

Employers currently have a three-month grace period to meet quarterly ATO super payment deadlines before being hit with additional superannuation guarantee charges (SGC).

SGCs updated

The government will update SGCs to suit the payday super reforms. The new measures will ensure employees are in the same position as had their employers paid on time. Employers who fail to pay on time will pay interest, which will start accruing from the day after payments fall due.

Employers could also face an additional enforcement charge worth up to 60 per cent of the shortfall. The ATO will be lenient with employers that voluntary disclose deadline breaches. These charges will be tax deductible.

Penalties

The government will be tougher on particularly tardy employers. Employers served with an ATO assessment will continue to accrue interest and face additional penalties up to 50 per cent of the shortfall if they fail to pay within 28 days of being assessed.

Interest charges and penalties that arise after an assessment will not be tax deductible.

Super funds will also have to lift their game. They will have their deadline to allocate contributions to accounts shortened from 20 days to three, allowing employees to check that they’ve been paid on time.

ATO to have more visibility on STP data

Employees will be able to report breaches to the ATO and Fair Work Ombudsman. However, the agency will also use its powers to gain greater access to Single Touch Payroll data to compare it to super fund reports.

The Albanese government said that the current arrangements were depriving employees of retirement income. It also said that the reforms would deter super theft and give the ATO the ability to act against dishonest employers swiftly.

In joint release Treasurer Jim Chalmers and his Assistant Treasurer Stephen Jones, said:

“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 federal government estimated that employers failed to pay $3.6 billion worth of superannuation guarantee contributions in FY2021.