The Council of Small Business Organisations Australia (COSBOA) supports the principle of Payday Super and timely superannuation payments for employees. However, COSBOA is urging the Federal Government to allow more time to ensure the system is fully prepared before enforcing a strict seven-day requirement.
Under the proposed legislation, employers would be required to ensure superannuation contributions reach employees’ super funds within seven calendar days of each pay cycle. While the intention to protect workers’ retirement savings is commendable, COSBOA warns that the current banking and processing systems are not yet capable of reliably meeting this deadline. Instead, COSBOA is calling on the government to implement a phased approach, moving to monthly payments by 1 July 2026, to allow time for necessary system upgrades and process improvements.
COSBOA Chair Matthew Addison says the seven day timeframe is unrealistic given the way payments are currently processed. “Super payments move through multiple banking and clearing house stages before reaching super funds. At present, payments can take several business days to clear, and many transactions require additional time to reconcile. A phased transition will ensure businesses can comply effectively without unintended consequences.”
Key concerns with the draft legislation
COSBOA highlights fundamental flaws in the proposed legislation that require urgent attention before implementation:
System readiness: The required super payment software, payroll systems, gateways, super funds, and the Australian Taxation Office (ATO) are not yet equipped to implement, monitor, and enforce the new requirements.
“Every payroll software provider will need to redesign, develop, and implement changes—a process that typically takes 18 months to three years,” Addison said. “Until the legislation is final, this work cannot even begin.”
Unrealistic processing deadlines: The draft law mandates that super funds must process or reject payments within three days, a drastic reduction from the current 28-day timeframe. While many contributions are processed quickly, an estimated 1-2% require additional verification. Under the new law, rejected payments could skyrocket from 1.5 million to 25 million per year, creating massive inefficiencies and unnecessary burdens for small businesses.
Employer penalties for system failures: The legislation states that if a super payment is rejected, the employer must rectify and resubmit the payment within the original seven day window—despite the fact that rejected payments are often due to external factors beyond the employer’s control.
“Super funds change their bank details, clearing houses have delays, and rejected payments may not be returned for months. Yet, under this law, employers will still face penalties,” Addison said. “That’s simply unfair.”
Cashflow disruptions for small businesses: Moving super payments from a quarterly cycle to within seven days of payday will significantly impact business cashflow.
“Many businesses may be forced to delay other payments—such as rent, electricity, or even tax obligations—just to meet this new requirement,” Addison noted.
Proposed solutions
COSBOA is calling on the government to refine the legislation with the following key changes:
A phased implementation: Monthly payments from 1 July 2026, moving towards payday superannuation by 1 July 2030.
A fairer penalty system: Employers should only be penalised if they fail to process and send payments on time—not if other parties in the system cause delays.
System readiness checks: A thorough regulatory impact assessment should be conducted to ensure all stakeholders—software providers, super funds, and the ATO—can meet the requirements before the law is enforced.
“We support the principle of Payday Super, but the government must ensure that the transition is achievable without creating chaos for small businesses,” Addison concluded.
“We need certainty, fairness, and a properly functioning system before imposing severe penalties on employers who are trying to do the right thing.”
For more information, visit www.cosboa.org.au
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For media enquiries or interviews, please contact Luke Achterstraat, Chief Executive Officer, COSBOA on ceo@cosboa.org.au or call +61 (0) 433 644 097.
Alternatively, please contact Matthew Addison, Chair, COSBOA on chair@cosboa.org.au or call +61 (0) 421 553 613.
About COSBOA
Established in 1979, The Council of Small Business Organisations Australia (COSBOA) is a member based not-for-profit organisation exclusively representing the interests of small businesses. The capability, representation, and reach of COSBOA are defined by a mix of over 50 national and state-based members. COSBOA's strength is its capacity to harness its members' views and advance consensus across policy areas common to many.
Our member organisations work with the COSBOA team to assist us with policy development and guide our advocacy - not just for small businesses but also for the benefit of the Australians they employ. In this capacity, COSBOA makes submissions and representations to the government, including its agencies, on issues affecting small businesses and to pursue good policy.
For more information, visit www.cosboa.org.au