Australian businesses are about to be hit with a $124k problem as Payday Super law approaches

Australian businesses have less than a month before completely changing how they pay staff. The federal government’s Payday Super law will come into effect from July 1 , meaning employers must pay superannuation at the same time salaries and wages are processed – whether that be weekly, fortnightly or monthly – instead of quarterly. Businesses have less than 30 days to prepare for the change. iStock It has been hailed as a scheme to save over one million Australian workers up to $5.7 billion in unpaid super, but business owners are preparing for a tough blow to cashflow. Before now, super could be paid four times per year and employers had 28 days to make the payment. Now, it must be deposited at the same time as pay and needs to be processed fully within seven days. The payday obligation is likely to disrupt cashflow and could hurt businesses that are already struggling to turn a profit. With less than 30 days to go, many are unprepared. Employment Hero research found that businesses will require an average of $124,000 in additional working capital to meet this upcoming obligation. “This is a huge change for every single business and the preparation window is closing fast,” Employment Hero’s general manager for payments, superannuation and benefits Rob Dunn said. “With inflation, rising costs and the upcoming ban of card surcharges, many businesses face a confluence of factors that could considerably impact their cashflow.” Just 12 per cent of businesses have already made the transition from quarterly super payments, the research found. Dunn warned that some employers may be blindsided by the change, finding themselves without enough cash to pay super weekly, fortnightly or monthly. This can lead to harsh penalties. “The biggest concern we’ve heard consistently from employers is their liability for ensuring funds land within only seven business days,” Dunn added. “For businesses still on the sidelines, now is the time to act. “Review your systems, understand your cash flow position and make sure you are set up to meet your obligations from day one.” More frequent super payments will be a boon for Aussies hoping to build up their retirement fund, though. Unpaid super is a chronic issue impacting the workforce and lobbying groups have argued leaves some people $30,000 worse off upon retirement. Super Members Council CEO Misha Schubert said the reform will benefit millions of Australian workers who need it most. It has been hailed as a scheme to save workers billions in unpaid super. iStock “Payday super is a simple, fair and urgent reform to help ensure every dollar owed to workers makes it into their super account on time and in full,” she said. “Millions of Australians cannot afford to wait. “Payday super is also tipped to deliver an average of an extra $7700 for working Australians by retirement because being paid your super sooner helps to grow your retirement savings faster.”