Global Employer Services update

Payday Super, PCG Updates, Franchisor Ruling & WFH Changes. 

Staying across the latest employment and payroll developments is essential as regulatory change continues to accelerate. In this update, our Global Employer Services team unpacks the most significant recent rulings and legislative changes shaping employer obligations from Payday Super reforms to evolving Fair Work rulings and ATO compliance priorities. 

Watch the full discussion and explore the key insights below to help your organisation prepare, comply, and stay informed. 

Key developments shaping employer compliance 

• Payday Super reforms take shape 
  Two new bills confirm that from 1 July 2026, employers will need to pay super within seven business days of payday. The ATO’s practical compliance guideline introduces a one-year grace period, outlining how “low,” “medium,” and “high” risk employers will be treated.
• Heightened employer accountability Recent rulings reinforce employer obligations from franchisors now being held liable for franchisee breaches, to record penalties for wage non-compliance. Employers must ensure robust record-keeping and proactive review of workplace arrangements.
• New compliance pressures on the horizon With the ATO’s renewed focus on small business tax integrity and the Fair Work Commission tightening remote work rights, compliance expectations are broadening across payroll, tax, and employment matters. 

Global Employer Services update - Transcript

Welcome to RSM’s latest Global Employer Services update. This update will touch on Payday Super, PCG Updates, Franchisor Ruling & WFH Changes. 

Payday Super – New Bills Introduced

A parliamentary sitting occurred on 9 October 2025, introducing the following two bills to the House of Representatives with the view to implement Payday Super elements:

The first being the Treasury Laws Amendment (Payday Superannuation) Bill 2025.

And the second, the Superannuation Guarantee Charge Amendment Bill 2025The October 2025 changes to the Payday Super legislation introduce several key updates ahead of its planned commencement on 1 July 2026.

Employers will now be required to pay superannuation guarantee contributions within seven business days of each payday, rather than the previously proposed seven calendar days. For new employees, the contribution window is 20 business days, and similar business-day-based timeframes will apply for contributions to new funds for existing employees. Importantly, late payment offsets—which previously allowed employers to reduce SG Charge liabilities under certain conditions—will no longer be available for contributions made after 1 July 2026. The legislation also introduces a provision allowing the Commissioner to waive penalties in cases of exceptional circumstances. These reforms aim to align SG payments with payroll cycles, improve compliance, and ensure employees receive their super contributions more promptly.

Payday Super Guideline – PCG 2025/D5

The proposed start date of 1 July 2026 has remained unchanged for Payday Super. 

The ATO has advised however in their recently released Practical Compliance Guideline (PCG) that for the period 1 July 2026 30 June 2027, a 'grace period' will be provided for some employers, dependent on circumstances and associated risk classification. The PCG outlines the ATO's proposed compliance approach for the first year of operation of Payday Super in respect of investigating superannuation guarantee shortfall for a Qualifying Earnings (QE) day that occurs from 1 July 2026 to 30 June 2027 inclusive. QE is the new definition for an employees earnings on which superannuation contributions are calculated, it includes ordinary time earnings, salary sacrificed super contributions, and other payments that are currently subject to superannuation.

The ATO have cited that between 1 July 2026 and 30 June 2027, that they will not have cause to review actions of employers classified as 'low risk'. However, from 1 July 2027, 'low risk' employers who have individual base SG shortfalls for one or more employees for QE Days on or after that date may be subject to compliance action in relation to those QE Days. An employer is considered low-risk if one, they made on-time superannuation contributions that met or exceeded the required amount for each employee. 2, some contributions weren't received by the super fund on time. And 3, the contributions were eventually received and allocated to employees as soon as reasonably possible, resulting in no final shortfalls for the quarter. A medium risk employer is one who does not meet the low risk criteria but the individual final SG shortfalls for all their employees are nil by 28 days after the end of the quarter in which the qualifying earnings were paid. A high risk employer is where they have one or more individual final SG shortfalls greater than nil for their employees by 28 days after the end of the quarter in which the qualifying earnings were paid.

The PCG outlines the approach the ATO will take for employers in each category. Simply put, the ATO will have no cause to review low risk employers actions, compliance resources be applied to investigate medium risk employers, and compliance resources be applied to investigate high risk employers.

Wage Theft Repayments of $1.76 Billion in the past 5 years

Wage theft in Australia has more than doubled over the past five years, according to new findings based on Fair Work Ombudsman data.

The report, released by software company Reckon, also identified the industries most affected by wage underpayment. These industries included Public Administration and Safety, along with Accommodation and Food Services. In total, of the 16,700 investigations completed, 56.3% of businesses were found to be non-compliant.

These wage underpayments have resulted in $1.76 billion being repaid to Australians in the past 5 years. Generally, it is employees raising the issue of underpayment, not employers, with self-reporting being incredibly low compared to the number of requests for assistance being made by employees to the Fair Work Ombudsman.

Smaller states and territories in Australia tend to have higher rates of business non-compliance with workplace regulations, despite having fewer businesses overall. The Northern Territory, Tasmania, and Queensland show particularly elevated rates. In contrast, larger states like New South Wales and Victoria, while receiving more reports, have proportionally lower non-compliance rates due to their larger business populations. Western Australia stands out with the lowest rate of non-compliance, reflecting stronger adherence to regulatory standards.

Franchisors Accountable for Franchisers

The Federal Court has confirmed that franchisors are presumed liable for franchisee breaches following the Bakers Delight Fair Work Ombudsman case.

Instead of looking at the details of the underpayment claims, which weren't disputed in the appeal, the Court focused on a key legal question important to franchisors: do 'reverse onus' rules apply when a franchisor is being held responsible for a franchisee's breaches? In its decision delivered on 16 October 2025, the Full Court confirmed that they do.

The Full Federal Court's rejection of Bakers Delight appeal has reinforced the Fair Work Ombudsman's authority to hold franchisors accountable for workplace violations committed by their franchisees, highlighting the increased legal risks franchisors face when breaches occur within their networks.

The FWO relied on extended liability rules along with a strong 'reverse onus' provision in section 557C of the Fair Work Act. This rule means that if an employer fails to meet record-keeping requirements, they must prove they didn't break the law, unless they have a valid excuse.

The Full Court ruled that section 557C was not confined to proceedings issued directly against an employer or franchisee.

The Full Court specifically rejected Bakers Delight's claim that section 557C shouldn't apply to franchisors. The Full Court clarified that the purpose of the extended liability provisions is to hold franchisors accountable when they have the ability to oversee and influence how their franchisees operate.

This case has significant implications for franchisors as poor franchisee record-keeping reverberates to franchisors leaving them liable.

Westpac required to approve remote work

A recent Fair Work Commission ruling in favor of a Westpac employee seeking to work remotely has raised concerns among employers about offering temporary work-from-home arrangements. The decision, which supported the employees request to continue working remotely after relocating, was based on their long-standing successful work from home history and the Fair Work Act's flexible work provisions.

The Fair Work Commission made several important findings in support of the employee's remote work request:

Firstly, weak business justification. Westpac's concerns about productivity and customer service lacked evidence. The employee had worked remotely for years without issues, which the Commission viewed positively.

Secondly, significant personal impact. Refusing the request would have caused serious hardship to the employee and her family. The Commission dismissed the argument that her personal decision to relocate should count against her.

Finally, Procedural failures. Westpac did not follow the proper steps under section 65A of the Fair Work Act, including failing to provide timely reasons and engage in genuine consultation, which invalidated its refusal.

Legal experts warn that even short-term work from home arrangements can set a precedent, making it harder for employers to later require a return to the office. The ruling emphasises that employers must consider individual circumstances rather than relying solely on company policies. The Finance Sector Union plans to use this case to challenge other work from home refusals, urging employers to reassess how they handle such requests.

NSW Payroll Tax: tax payable on payments to subcontracted cleaners

The New South Wales Supreme Court has ruled that contracts between commercial cleaning companies and their subcontractors are considered employment agency contracts under section 37 of the Payroll Tax Act 2007 NSW. This classification meant that payments made to subcontractors were treated as wages under section, making them subject to payroll tax.

The case involved two groups of taxpayers, SKG entities and Ezko entities, who operated cleaning businesses servicing clients such as shopping centres, government buildings, and offices. They used both direct employees and subcontractors to deliver these services.

The taxpayers argued that their contracts did not create employment-like relationships. However, the Court disagreed, finding that the contracts were highly detailed in terms of service expectations, timing, and location, indicating a strong link to the clients' core business operations. Even though clients didn't directly control the workers like employers, they retained full authority over the services provided. As a result, the court affirmed the Commissioner's assessment, concluding that the taxpayers' arrangements fell within the scope of the employment agency provisions and were subject to payroll tax</voice>

ATO’s latest small business focus areas

On 1 October, the ATO released its latest small business focus areas, outlining common issues that are drawing its attention. It highlighted specific industries that often experience recurring problems with tax compliance.

The construction industry and the professional, scientific, and technical services sector—which includes accountants, engineers, and architects—were among the key areas of focus.

The ATO noted that it continues to see recurring issues in certain industries. These sectors are closely monitored, and the ATO will conduct audits and apply penalties and interest where necessary. Common problems include errors in income reporting, expense claims, goods and services tax registration, and the research and development tax incentive offset. Businesses frequently make mistakes such as submitting incorrect claims under the research and development tax incentive, particularly for activities that do not meet eligibility criteria. Other issues include overclaiming expenses and goods and services tax credits, omitting sales and income from business activity statements and tax returns, and failing to register for goods and services tax when required. Firms were also found to have incorrectly reported private expenses as business-related and failed to seek independent advice from a registered tax agent—especially in head contractor and subcontractor arrangements.

The ATO has urged small businesses to take proactive steps to ensure they are getting their tax compliance right, especially for those in the identified sectors as they will face increased attention and ATO activity.

Wage Compliance – Sinamon Cafe breaches employment laws

Owners of the Sinamon Café chain in Perth have been penalised $31,000 for underpaying a worker and failing to keep the necessary employment records, as required under section 535 of the Fair Work Act 2009.

The WA Industrial Magistrates Court found the owners had failed to pay the employee any superannuation throughout their employment, nor did they maintain employment records as required by the WA Industrial Relations Act.

The worker was able to provide evidence that when they questioned their rate of pay, the owners suggested they find another job if they were unhappy with their current rate. This is not the first time the employer has faced court action over wage compliance issues. In 2021, they were penalised $14,300 for obstructing industrial inspectors, and in 2023, they were fined $89,800 for breaching court orders to produce employment records.

Industrial Magistrate Coleman emphasised that the owners had shown a "blatant disregard" for the compliance regime and their obligations as employers.

Private Sector Labour Relations Director Cara Breuder said the $31,000 penalty reflects the seriousness of the misconduct and takes into consideration the circumstances of the young, vulnerable employee.

Surge in dismissal claims are flooding the workplace tribunal

Unfair dismissal claims have risen by 27% above their long-term average, with total cases submitted to the workplace tribunal expected to surpass a record 50,000. Employers say the trend increasingly reflects attempts to secure financial compensation rather than resolve genuine workplace issues.

Fair Work Commission president Justice Adam Hatcher noted that the sharp increase in dismissal claims, both over the past five years and in just the last quarter, is straining the commission's ability to manage its caseload, stating it is unsustainable with their current operational, performance and funding structure.

One of the most significant increases has been in general protections claims, where employees assert that their employer took adverse action against them for an unlawful reason, such as exercising their right to raise a complaint or make a workplace inquiry.

Andrew McKellar, chief executive of the Australian Chamber of Commerce and Industry, claimed that some lawyers are filing claims primarily to pursue financial settlements rather than address genuine workplace disputes. This is making employers think twice about managing conduct or employee performance due to the potential threat of being brought to the commission.