UPDATE: Major changes to superannuation laws in Australia are set to create a significant cash flow crisis for small businesses starting on July 1, 2026. The Federal Government’s new regulation mandates that all employers must pay superannuation simultaneously with payroll, a shift from the previous requirement of every 90 days.
Why This Matters Right Now: This change could force Australian businesses to dig deep, with average cash flow issues projected at $124,000, according to Ben Thompson, founder and CEO of Employment Hero. “While I support the principle of the legislation, if employees lose their jobs because of early super payments, it’s not a victory,” Thompson stated.
The new payday super laws mean that around 87% of businesses using Employment Hero have relied on quarterly payments to manage cash flow. This shift will not only strain finances but could potentially lead to job losses. “The majority of small businesses do not have $124,000 just lying around,” Thompson warned.
According to statistics from the Council of Small Business Organisations Australia, 26% of businesses are expected to face cash flow problems due to this legislation, raising concerns about rising unemployment rates.
While businesses brace for impact, superannuation providers are positioning this change as a victory for workers. The Treasury estimates that a 25-year-old earning the median income could be approximately $6,000 better off in retirement simply by receiving superannuation payments more frequently.
Shane Hancock, general manager of AustralianSuper, emphasized the benefits for employees, stating, “Earlier payments mean super is invested sooner, maximizing compounding growth.” This change is expected to combat issues of unpaid and underpaid super, ensuring that Australians receive what they’ve earned.
The Super Members Council claims that 3.3 million Australians missed out on $5.7 billion in super in the last fiscal year, averaging $1,730 lost per person. This financial gap disproportionately affects vulnerable groups, including young workers, women, and low-income earners.
Misha Schubert, CEO of the Super Members Council, dubbed the legislation a historic change. “The passage of payday super laws will ensure every dollar owed to millions of workers arrives in their super accounts on time and in full,” she noted.
As these regulations unfold, the immediate challenge lies in balancing the financial health of businesses while ensuring that workers are fairly compensated. The clock is ticking, and the implications of this change are already being felt across the nation.
What Happens Next: As the deadline approaches, small businesses must prepare for this seismic shift. Stakeholders are urging employers to strategize their finances to mitigate the impending cash flow crunch. The conversation around the impact of these laws will likely intensify in the coming months, with both business leaders and employee advocates weighing in on how to navigate this new landscape.
Stay tuned for ongoing updates as this situation develops.
