Global Employer Services Update - August 2026

Global Employer Services update - Transcript

Payday Super - ATO Released Additional Guidance   

Significant attention continued to be directed towards Payday Super as regulators and industry stakeholders worked through the practical implementation of the reforms, with Payday Super now in effect as of July 1st 2026. Additional implementation guidance was released by the ATO while the Senate Committee continued its review of supporting Payday Super regulations. Key topics under discussion included qualifying earnings, salary sacrifice treatment, timing of contributions and payroll system readiness. Given the scale of the changes, businesses that delay implementation activities may face operational and compliance challenges now that the new regime is fully implemented.  

 LI 2026/20 – Out-of-Cycle Qualifying Earnings  

During June, the ATO released guidance supporting the implementation of Payday Super.  Legislative Instrument 2026/20 was issued outlining how employers may treat certain out-of-cycle payments, including adjustments and corrections, for superannuation guarantee purposes. The guidance is intended to provide greater certainty regarding the timing of super contributions where payments are processed separately from ordinary payroll runs. This development is particularly important because many organisations are currently reviewing payroll systems, wage codes and payment processes to adapt to Payday Super. Employers should continue assessing whether their payroll systems are capable of processing superannuation contributions within the new timeframes and whether any changes are required to payroll governance and reporting processes.  

 Payday Super - Practical First Year Guidelines     

As a reminder, the ATO has provided practical compliance guidelines to help employers adjust to the first year of Payday Super. The key message is that employers should make a genuine effort to comply with the new requirements. As reflected in the ATO’s risk matrix, employers will be considered low risk where they have sought to ensure Super Guarantee contributions are paid on the relevant payday and, where payments have not been received by the fund, have taken reasonable steps to have the issue resolved and contributions paid. In these cases, no further compliance activity is generally expected. Medium risk applies where an employer does not meet the low-risk criteria but rectifies the issue within 28 days and ensures no unpaid Super Guarantee remains beyond the deadline that would have applied under the former quarterly system. Finally, high risk applies where issues remain unresolved more than 28 days after the end of the relevant quarter. In these circumstances, the ATO is likely to allocate compliance resources to review the employer's arrangements.  

 Outcome of Department of Education v FCT [2026]  

Next, the federal court has found that in the case of Department of Education and The Commissioner of Taxation, an annual salary loading allowance does not constitute OTE for super guarantee purposes. This is a significant outcome, as it broadens the existing understanding of what can be characterised as "earnings in respect of ordinary hours of work." Despite both sides agreeing the salary loading allowance was nearly identical to annual leave loading, which is subject to superannuation, it was determined that the salary loading allowance was a separate annual lump-sum payment, payable by reference to being employed on a date and service criteria, not as earnings for ordinary hours. Whilst this may not be directly applicable to a number of cases as many of the facts where specific to the nature of work done by teachers, it rejects the position that unless annual leave loading is shown to compensate for lost overtime, it must be OTE, or qualifying earnings for the purpose of payday super.  

 SKG Cleaning Services Pty Ltd v  Chief Commissioner of State Revenue    

Another significant payroll tax decision was handed down by the New South Wales Court of Appeal in July 2026. The Court unanimously dismissed an appeal by commercial cleaning businesses SKG Cleaning Services and Ezko, confirming that a number of their service arrangements constituted 'employment agency contracts' for payroll tax purposes. The decision continues a growing line of cases where Revenue NSW has successfully argued that outsourced labor arrangements involving subcontracted workers can still be subject to payroll tax. Importantly, the Court confirmed that the key issue is whether the services are performed 'in and for' the client's business operations. While the degree of control exercised by a client over individual workers remains relevant, the Court emphasised that control is not the determining factor. Instead, the focus is on the relationship between the services provided and the ordinary activities of the client's business. The Court observed that regular and ongoing cleaning services are typically integral to the operation of most businesses and would ordinarily be performed by employees if they were not outsourced.  

 Fair Work Commission Annual Wage Review   

The Fair Work Commission has released its Annual Wage Review decision, and this year's outcome is particularly significant. The review has two main purposes: firstly, to set the National Minimum Wage for employees who are not covered by a modern award or enterprise agreement, and secondly, to review minimum wage rates under modern awards, which impact around 2.8 million Australian workers.  

The key outcomes are a 6% increase to the National Minimum Wage, bringing it to $1,040.90 per week or $26.44 per hour. In addition, modern award wages will increase by 4.75%.  

These changes apply from the first full pay period on or after 1 July 2026. Employers should ensure their payroll systems, employment contracts, and remuneration practices are updated accordingly to remain compliant with workplace laws.  

 UNSW Underpayment   

UNSW entered into an Enforceable Undertaking with the Fair Work Ombudsman involving more than $32 million in remediation payments affecting over 33,000 current and former employees. UNSW has admitted to underpaying staff entitlements under UNSW enterprise agreements between 2014 and 2023, and to breaching record-keeping and pay slip requirements. The matter highlights the significant financial and reputational consequences associated with payroll governance failures and reinforces the importance of regular payroll reviews, enterprise agreement compliance assessments and wage code testing.  

Charles Darwin University Underpayments  

Another significant wage compliance matter emerged during June 2026 when Charles Darwin University entered into an Enforceable Undertaking with the Fair Work Ombudsman following the identification of more than $4 million in employee underpayments. The remediation program affects more than 800 current and former employees and includes back payments, superannuation and interest. Similar to the UNSW matter, the case reinforces the increasing scrutiny being applied to payroll governance within the higher education sector.  

Hudson Labour Hire Licence Cancelled  

Victoria's Labor Hire Authority cancelled the labor hire licence of Hudson Global Resources after identifying significant compliance concerns, including unpaid superannuation, unpaid wages and substantial tax liabilities. The decision demonstrates the increasing use of labor hire licensing powers to address tax and workplace compliance issues. Employers engaging labor hire providers should continue conducting due diligence regarding licensing, payroll compliance and worker entitlements.  

Wage Compliance – G8 Education sued over $2m in unpaid wages  

The Fair Work Ombudsman has commenced legal proceedings against ASX-listed childcare provider G8 Education, alleging more than $2 million in employee underpayments across its workforce. The alleged contraventions include failures to pay minimum wage rates and overtime entitlements, underpayments affecting employees engaged as trainees, and failures to pay required first-aid allowances. Notably, more than half of the alleged underpayments relate to employees working under Individual Flexibility Arrangements, which are permitted under modern awards provided employees remain better off overall compared to the applicable award conditions. The current proceedings have commenced despite the fact that G8 had previously self-reported approximately $41 million in payroll-related underpayments and remediation obligations in 2020. The matter serves as a timely reminder that remediation programs alone may not be sufficient where underlying payroll systems, governance frameworks and award interpretation processes are not comprehensively reviewed and corrected. Employers relying on flexibility arrangements or bespoke remuneration models should ensure ongoing testing and monitoring to confirm employees remain compliant with minimum entitlement requirements.  

Wage Compliance - Chemist Warehouse Potential Nationwide Underpayment Exposure  

A significant wage compliance decision was handed down by the South Australian Employment Tribunal during July 2026, with the Tribunal finding that four Chemist Warehouse stores underpaid employees who had obtained a Certificate III in Community Pharmacy. The case centred on workers who remained classified and paid at lower award levels despite obtaining qualifications associated with higher classifications and performing more complex duties, and may have broader implications across Chemist Warehouse's national network of stores. The decision highlights the importance of ensuring that employee classifications, qualifications and duties remain aligned with award requirements. Employers should regularly review workforce classifications following training, upskilling and qualification programs to ensure that remuneration arrangements appropriately reflect employees' skills and responsibilities and remain compliant with applicable industrial instruments.  

Dummy Director Allegations  

Several directors of Heinrich Constructions Australia alleged they were appointed to labor hire companies with limited involvement in the businesses, only to later face substantial personal tax liabilities when the entities collapsed owing millions of dollars to the ATO. The matter serves as a reminder that directors may be exposed to significant financial risk where payroll and taxation obligations are not properly managed.