If you thought your business couldn’t be hit with more costs, think again. A new law coming into play in 2026 could create a serious cash flow crunch for employers, forcing them to pay superannuation on the same day they run payroll. While this may sound like a good deal for employees, it’s causing some serious headaches for businesses—especially small ones.
The New Law and What It Means for Employers
Starting July 1, 2026, the Australian Labor government is enforcing a significant change in how superannuation is paid. Instead of businesses paying super quarterly, they’ll now be required to pay it every time they run payroll. This may sound like a step in the right direction for employees, who will receive their super earlier and benefit from the compounding growth, but it’s creating a cash flow issue for employers who often rely on the time gap between payroll and superannuation payments to manage their finances.
Ben Thompson, founder and CEO of Employment Hero, has expressed his support for the principles behind the new law, but he’s also sounding the alarm. He says that small businesses are going to feel the squeeze. According to Thompson, about 87% of businesses using Employment Hero’s software pay super quarterly, using the 90-day period as a way to manage cash flow. This change, requiring businesses to pay super on every payday, will create a cash flow problem for businesses, with the average small business facing a potential shortfall of $124,000.
For many businesses, especially those with a small number of employees, this could lead to major difficulties, as they simply don’t have that kind of cash on hand. The added burden could even result in job cuts, as businesses struggle to keep up with both payroll and superannuation payments.
What’s at Stake for Workers?
On the flip side, superannuation providers are hailing the change as a win for workers. The new system will ensure that employees’ super is paid on time and will be invested sooner, giving it the chance to grow earlier than under the current system. Shane Hancock, the General Manager of Retirement at AustralianSuper, has noted to Yahoo Finance that the changes will maximize the benefits of compounding growth, which should leave workers better off in the long run.
Treasury’s calculations suggest that a 25-year-old earning the median income will be about $6,000 better off by the time they retire, simply by having their super paid every two weeks instead of quarterly. For workers, this means their super will be paid on time and invested sooner, which could have a big impact over a lifetime of savings.
Will This Create More Jobs or Job Cuts?
Despite the clear benefit for employees, the big question is whether businesses will be able to keep up. The 26% of small businesses predicted to struggle with cash flow may find themselves in a tight spot. Some may even be forced to cut jobs just to stay afloat. In the end, it’s clear that the impact of this new law could be far-reaching, and while employees stand to benefit, businesses may bear the brunt of the financial burden.
So, while it might sound like a win-win—employees get their super faster, and businesses help boost retirement savings—the reality is more complicated. The looming credit crunch and cash flow issues for businesses could outweigh the benefits in the short term. We’ll have to see how businesses adapt as 2026 approaches, but one thing’s for sure: it’s a change that’s going to affect a lot of people.
