Global Employer Services update

Key developments shaping employer compliance 

Employers continue to face rapid regulatory change across superannuation, payroll, and workplace compliance. This month’s Global Employer Services update highlights the ATO’s first year approach to Payday Super, emerging contribution cap risks, and the latest wage compliance enforcement activity.

• Payday Super: ATO confirms risk based compliance approach
  The ATO will apply a structured low , medium and high risk model when assessing Payday Super compliance in its first year, directing scrutiny toward higher risk SG shortfalls while low risk employers receive no compliance attention.
• Concessional cap risks increase as Payday Super commences
  Timing overlaps could result in some employees receiving up to 15 months of super in one year, creating the potential for concessional cap breaches. The ATO has issued practical preparation guidance and signalled transitional relief for inadvertent breaches.
• Wage compliance penalties continue to escalate
  Recent enforcement actions against major employers underscore the regulator’s focus on accurate payroll records, underpayment prevention and strengthened payroll governance — with penalties now regularly reaching six figures.
• Get in touch
  To discuss how these developments may affect your organisation – or to assess your readiness for Payday Super and evolving Fair Work and FBT compliance – connect with your local RSM Global Employer Services team.

Global Employer Services update - Transcript

Welcome to RSM’s latest Global Employer Services update. 

 ATO's First Year Compliance Approach - Payday Super  

The ATO has now finalised Practical Compliance Guideline PCG 2026 1. This Guideline explains how the ATO will allocate compliance resources during the first year of Payday Super and it provides welcome clarity on how risk will be assessed during the transition period.

Importantly, the ATO has confirmed it will take a risk-based approach, focusing its attention on higher-risk Super Guarantee shortfalls rather than minor or quickly corrected issues. An employer is low risk when they have made all contributions on time and in full, delay is solely because the fund received the contributions late, and when those contributions are allocated as soon as reasonably practicable, leaving no remaining shortfalls. An employer is medium‐risk when they do not meet the low‐risk criteria, but they have cleared all super shortfalls within 28 days after the end of the relevant quarter. An employer is in the high‐risk zone when they meet neither the low‐risk nor medium‐risk criteria, or when any super shortfalls remain unpaid after the 28‐day period following the end of the quarter. The ATO has stated that it will allocate no compliance resources to employers who fall within the low‐risk zone when testing Payday Super compliance. It is therefore important that employers take practical steps to ensure they fall within this low‐risk category. Some steps we have seen employers take include conducting technical reviews of superannuation and STP2 flags within payroll systems, performing data testing to ensure superannuation is calculated and paid correctly, and reviewing and uplifting broader superannuation processes.

 Payday Super - Concessional Cap Risks and ATO Releases Checklist  

The shift to payday super could cause some workers to receive up to 15 months of super in one financial year, due to timing overlaps as employers move away from quarterly payments. This may push people over the $30,000 concessional contributions cap, leading to unexpected tax bills, particularly for high-income earners and salary-sacrifice contributors. The government and ATO are aware of the issue and say transitional rules or discretion will be used so workers aren't penalised for inadvertent cap breaches when payday super starts on 1 July 2026. Further clarification is expected as the July 2026 start date approaches.

The ATO has also released practical guidance to help employers prepare for Payday Super largely in the form of a checklist and web guidance. This checklist focuses on payroll readiness, super fund processing and internal controls. Employers should be using this now to identify gaps well before the new regime begins.

 Protected Earnings Amount Changes 

From 1 January 2026, the Protected Earnings Amount for child support deductions has increased, meaning a higher portion of an employee's income must be protected from deductions. Employers need to ensure payroll systems apply the updated thresholds, so deductions do not reduce take-home pay below the new minimum, particularly for employees with variable earnings. Reviewing calculations and avoiding manual overrides will be critical to staying compliant and protecting employee financial wellbeing.

FWC Full Bench decisions

The Fair Work Commission has clarified that work performed immediately before and after a sleepover under the SCHADS Award counts as one continuous shift. This resolves confusion about whether the sleepover break created separate shifts. The clarification affects how ordinary hours, overtime and penalties are calculated. Employers using sleepover arrangements should review rosters and payroll processes to ensure compliance.

The FWC has approved major updates to classifications and pay structures under the Health Professionals and Support Services Award. The changes include revised classifications, and staged wage increases for roles like dental assistants and pathology collectors, aimed at addressing historical gender-based undervaluation. Increases begin in April 2026, with further adjustments over several years. Employers should start reviewing job classifications, pay rates and payroll systems in preparation.

FWC ruling of genuine redundancy

A recent Fair Work Commission decision confirmed that an accountant's dismissal from a charity was a genuine redundancy, with the Commission placing significant weight on the employer's process and supporting documentation. The role was found to be genuinely no longer required, and the employer was able to demonstrate that consultation obligations were met, and the decision was driven by operational change rather than performance or conduct. This case highlights that even where outcomes are defensible, poor documentation or flawed process can quickly undermine an employer's position and lead to costly disputes.

FBT – Update

While there are no major legislative changes in the Fringe Benefits Tax space this month, FBT remains an active compliance focus for the ATO. Employers who provide benefits should be using this time to review current arrangements, particularly in higher-risk areas such as vehicles, entertainment and expense reimbursements, and to prepare early ahead of the upcoming FBT season. This is also an area where automation can materially reduce compliance risk and save time.