Payday Super: What property and construction employers need to do now

From 1 July 2026, Australia’s superannuation rules will change as Payday Super comes into effect. 

These reforms represent a significant compliance shift for construction, contracting and property businesses, where weekly pay, allowances, bonuses and labour‑based contracting models are common.

For many employers in this sector, Payday Super will require changes to payroll configuration, payment processes, contractor classification and cash‑flow planning. Taking action early will be critical to avoid penalties and operational disruption.

Payday Super at a glance: What changes and 
what to do now

Key changes:

• Super must be paid each pay cycle, rather than quarterly.
• Contributions must be received by the worker’s super fund within seven business days of payday.
• The calculation base moves from Ordinary Time Earnings (OTE) to Qualifying Earnings (QE).
• Single Touch Payroll (STP) reporting expands to include both QE and super liability for each eligible worker.

What payroll teams should do now:

• Confirm clearing house and banking processing times; don’t assume you have the full seven business days.
• Review payroll pay items (allowances, bonuses, commissions and incentives) and map them to QE.
• Identify contractor and labour‑hire arrangements that may attract super under the expanded rules.
• Check payroll and STP capability to report QE and super liability per pay event.
• Establish reconciliation and exception reporting so late or rejected super payments are identified quickly.

Need more information? Find it in our Payday Super guide.

How does Payday Super affect the property and construction sector?

Unpaid and late superannuation has been a persistent compliance risk in the construction sector, driven by labour intensive projects, subcontracting, workforce mobility and a high rate of business insolvencies. Under Payday Super, both employees and the Australian Taxation Office (ATO) will have much earlier visibility of missed or short payments, often within days rather than months.

By requiring super to be paid at the same time as wages, Payday Super removes the ability to defer super for cash flow purposes and significantly reduces the scope to ‘catch up later.’ As a result, payroll accuracy, processing speed and governance controls will become far more important, particularly for businesses paying workers weekly or fortnightly. Incorrect classification or delayed payments may now trigger immediate ATO assessments and penalties.

Because construction payrolls often include multiple allowances, variable incentives and contractor payments, many businesses will need to review both what earnings attract super and how quickly super reaches funds.

QE vs OTE: what may change in construction payrolls

From 1 July 2026, super will be calculated on QE rather than OTE. QE is designed to capture a broader range of payments, meaning some amounts that were historically excluded from super may now need to be reassessed.

Payroll pay items to review against QE (examples):

• Site, travel and tool allowances (including award or enterprise agreement based allowances).
• Bonuses, commissions and productivity or completion incentives.
• Overtime, shift and penalty payments and how these are coded.
• Leave payments and leave loading.
• One off or ad hoc payments currently excluded from super.

What this means for payroll systems

Most employers will need to review pay code mappings, ensure super is calculated consistently on QE, and test reporting outputs before go live. Where multiple payrolls or entities exist (for example wages plus commission only roles), consistency across all pay groups is critical.

Contractors and labour hire are a key risk area

One of the key changes likely to impact the construction sector is the expanded definition of what constitutes an employee when it comes to superannuation contributions.

Construction and property businesses commonly engage individuals through subcontracting or labour hire arrangements. In some cases, payments to independent contractors who are paid mainly for their labour may be treated as employee like payments for superannuation purposes, even where the worker invoices under an ABN. This significantly increases compliance risk across construction, development and property management groups.

Where this applies, super contributions may need to be paid under Payday Super timeframes, and STP reporting obligations may also arise. In these cases, there is no distinction between employees and deemed employees for superannuation obligations or due dates. Construction businesses must meet these requirements to avoid significant penalties. 

Common engagement types to review (examples)

• Individual trades engaged directly where the engagement is primarily for labour.
• Sole trader site supervisors working sequentially across projects.
• Maintenance contractors engaged on ongoing, recurring arrangements.
• Commission based roles (such as sales or leasing agents) engaged as individuals.

What to do

Before engaging or paying a contractor for the first time, assess whether superannuation may be payable. Reviewing contractor agreements, onboarding processes and payroll classifications now can significantly reduce exposure to penalties once Payday Super commences.

Late super: What happens if payments are not received on time?

Under Payday Super, the obligation is not simply to initiate a payment within seven business days; the contribution must be received by the worker’s super fund within that timeframe. Clearing house processing times and bank cut‑offs can therefore determine whether a payment is considered late.

To manage this risk:

• Document the full payroll‑to‑fund timeline, from pay run approval through to fund receipt.
• Set internal payment cut‑offs earlier than day seven (for example, payday or the next business day).

Implement exception reporting to flag rejected payments, incorrect fund details or clearing house failures so issues can be corrected quickly.

Increased penalties and the SGC

If super contributions are not received by the worker’s fund within seven business days of payday, employers may be exposed to the Superannuation Guarantee Charge (SGC).

The SGC may include:

• The unpaid superannuation shortfall on QE.
• Notional earnings interest compounded daily at the ATO's general interest charge rate. This is accrued from the day after the due date (so from day eight) until the late payment clears the superannuation guarantee shortfall, or the ATO makes an assessment (first of).
• An administrative uplift for the qualifying earnings day, which is 60% of the sum of the individual final superannuation guarantee shortfall and individual notional earnings components for the qualifying earnings day. Note that this uplift can be reduced where employers lodge a voluntary disclosure and have a clean history of SGC assessments from 1 July.
• Additional late payment penalties apply when the SGC is not paid 28 days after assessment. The late payment penalty rate is:
  • 25% where the employer has not previously been penalised for SGC in the last 24 months.
  • 50% where the employer has been penalised for SGC in the previous 24 months.

For construction businesses operating on tight margins, these amounts can escalate quickly. Even small, repeated errors across weekly pay cycles can become material.

For example: A weekly paid site worker earning $2,500 can turn a $300 super obligation into over $320 once interest and ATO administration fees apply. If a builder has 10 site workers and misses just one weekly payday, the total non deductible SGC can exceed $3,200, and repeated errors during busy project cycles can escalate rapidly.

ATO SBSCH closes 30 June 2026

The ATO Small Business Superannuation Clearing House (SBSCH) will close permanently on 30 June 2026. 

Businesses currently using SBSCH should:

• Transition to an alternative clearing house or payment provider.
• Download and retain historical records before closure.
• Factor the provider change into Payday Super planning, as payment timelines may differ.

Recommendations and practical actional plan for construction businesses

• Process superannuation contributions on payday.
  • Do not rely on having seven business days to process superannuation. Payments can take four business days to reach clearing houses
  • Confirm processing times and set internal approval and payment cut‑offs.
• Review payroll configuration so pay items align with QE.
• Review contractor and labour‑hire models for super exposure.
• Implement monitoring and reconciliation to detect late or failed payments.
• Test systems and processes well before 1 July 2026.

 How RSM can help 

In an industry driven by project timelines, cash flow and labour availability, construction businesses are particularly exposed under the new Payday Super regime. The move to real time superannuation payments, combined with broader qualifying earnings and increased scrutiny of contractor arrangements, means compliance can no longer be managed retrospectively. Taking action now will help construction businesses avoid costly penalties, protect cash flow and ensure readiness for 1 July 2026.

FOR MORE INFORMATION

If you would like assistance reviewing pay items against QE, assessing contractor exposure, or designing payroll‑to‑fund receipt processes and controls, please contact your local RSM adviser.