UPDATE: Starting July 1, 2026, Australian small businesses will face a significant cash flow crisis due to new superannuation laws, which mandate that employers pay superannuation simultaneously with payroll. This critical change, announced by the Federal Government, will lead to an estimated cash flow crunch of $124,000 for the average business, according to Ben Thompson, founder and CEO of Employment Hero.
The urgency of this situation cannot be overstated. Currently, about 87 percent of businesses utilizing Employment Hero software pay superannuation quarterly, allowing them to manage cash flow effectively. However, with the upcoming legislation, employers will have to disburse super payments every pay period, creating an immediate financial strain. Thompson warned, “If people lose their job because they get paid super early, it doesn’t seem like a victory.”
According to Thompson, approximately 26 percent of small businesses will struggle financially under these new regulations, potentially leading to increased unemployment rates. The majority of small businesses do not have $124,000 readily available, raising alarms about their sustainability.
While the legislation aims to benefit employees by ensuring timely super contributions, it presents dire challenges for employers. Thompson highlighted that the average business on their platform employs around 40 workers, each earning about $90,000 in salary. This change could force many businesses to make tough decisions, including layoffs, as they navigate this new financial landscape.
In contrast, superannuation providers are celebrating the revised regulations as a win for workers. Shane Hancock, general manager of AustralianSuper, emphasized that these changes will enable workers to receive their superannuation earlier, maximizing the potential for compound growth on their investments. Hancock stated, “Payday super will also help to address issues of unpaid and underpaid super so Australians receive the super they have earned.”
The Super Members Council has labeled the payday super laws a “game changer” for workers, citing that 3.3 million Australians missed out on $5.7 billion in super contributions last year. Vulnerable groups, including the youth, women, and low-income workers, are disproportionately affected by these losses, which can amount to up to $30,000 less at retirement.
As the clock ticks down to the implementation date, small business owners across Australia are feeling the pressure. The Council of Small Business Organisations Australia warns that many will not be prepared for this financial shift.
Next Steps: Business owners and employees must stay informed about these developments and prepare for the changes that are about to disrupt the Australian employment landscape. The situation remains fluid, and the impact of these new laws will continue to unfold as the deadline approaches.
This urgent update is a call to action for small business owners to reassess their financial strategies and for employees to understand how these changes will affect their retirement savings. The Australian economy is on the brink of a significant shift, and all eyes are on how these new regulations will play out in the coming months.
