Australian businesses to face cash flow crunch from new super laws

Australian businesses face a cash flow crunch in 2026.

Under a change introduced by the Labor government taking effect on July 1, 2026, all employers will have to pay their superannuation at the same time as they run payroll.

Previously, superannuation was obliged to be paid every 90 days.

Employment Hero founder and chief executive Ben Thompson explained to NewsWire that while employees had earnt the money, the new payday super laws would create a credit crunch for businesses.

“I agree with the principle of the legislation, but if people lose their job because they get paid super early it doesn’t seem like a victory,” he said.

According to Mr Thompson, about 87 per cent of businesses using Employment Hero software pay superannuation quarterly, temporarily using the superannuation payments as cash flow before they are paid to employees.

“What is going to happen from July 1, you have to pay out super every time you run payroll, that means the average Australian business according to our analyst will incur a cash flow crunch of $124,000,” Mr Thompson said.

Mr Thompson said this would create a credit crunch for workers, as the majority of small businesses did not have $124,000 “lying around”.

Employment Hero says the average business on the platform has 40 employees and pays about $90,000 per worker in salary.

It says employers having to paying super quarterly rather than monthly will create a cash flow crunch.

Mr Thompson pointed out that he did not have an issue with the intent of the new payday super laws, as employees had earnt their superannuation, but said they would create cash flow consequences for small business.

Using Council of Small Business Organisations Australia stats, Mr Thompson said 26 per cent of businesses would have a cash flow issue due because of the legislation, which he said could result in an increase in unemployment.

Despite the pressures placed on businesses, superannuation providers have touted the changing regulations as a win for workers.

The issues with quarterly superannuation were miscalculations from employers and an assumption from employees that the funds had been paid.

Treasury estimates the changes will mean a 25-year-old who earns the median income will be about $6000 or 1.5 per cent better off in retirement simply by paying superannuation every two weeks instead of quarterly.

AustralianSuper general manager retirement Shane Hancock says payday super’s introduction is a win for workers, although he notes it will be a challenge for businesses.

“For many working Australians, this means their super will be paid earlier and invested earlier, maximising the benefits of compounding growth,” he said.

“Payday super will also help to address issues of unpaid and underpaid super so Australians receive the super they have earnt.”

The Super Members Council says payday super will be a “game changer for workers”.

SMC modelling shows 3.3 million Australians were not paid $5.7bn in super in 2022-23, missing out on an average $1730 each a year. Those losses can make people up to $30,000 poorer at retirement.

According to the SMC, this disproportionately affects vulnerable groups, with the young, women and low-income workers most at risk.

SMC chief executive Misha Schubert labelled it a historic change.

“The passage of payday super laws will help ensure every dollar owed to millions of workers makes it into their super account on time and in full,” she said.

“Payday super will also help to deliver an average of $7700 more for working Australians by retirement because being paid your super sooner helps to grow your investment returns faster.”