Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Dr Daniel Mulino MP)Chapter 3: Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Treasury Laws Amendment (Payday Superannuation) Bill 2025
Overview
3.1 The Superannuation Guarantee Charge Amendment Bill 2025 and the Treasury Laws Amendment (Payday Superannuation) Bill 2025 are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
3.2 The Bills amend the SGC Act and the SGA Act to create a strong incentive for employers to make superannuation contributions for their employees at the same time as they pay the employee's qualifying earnings.
3.3 The increased frequency for making SG contributions (compared to the previous quarterly SG model) will enable unpaid or underpaid SG to be detected and managed at an earlier stage.
3.4 Under the payday SG framework, employers that make SG contributions so that they are received by the employee's superannuation fund within a specified period (usually 7 business days) after the employer has paid qualifying earnings will be able to reduce their liability to pay the SG charge to nil.
3.5 Where SG contributions are received after the specified period, or are not made at all, the employer will have an SG shortfall and will be liable for the SG charge. Notional earnings will accrue on unpaid SG to compensate the employee for lost superannuation earnings. Employers can reduce the amount of SG charge that they will be liable for by making late SG contributions and promptly submitting a voluntary disclosure statement to the Commissioner.
3.6 The Bill also includes new administrative penalties for employers who do not pay their SG charge.
3.7 The payday SG framework is intended to address the issue of unpaid superannuation and help to secure dignified retirement outcomes for working Australians.
Human rights implications
3.8 The Bills engage the following rights:
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- The right to social security – Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) and Article 11(1)(e) of the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW)
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- The right to a standard of living and security – Article 25 of the Universal Declaration of Human Rights (UDHR).
The right to social security at retirement and old age
3.9 Article 9 of the ICESCR recognises the right to an adequate standard of living and the right to health. It recognises the importance of adequate social benefits in reducing the effects of poverty.
3.10 Article 11(1)(e) of the CEDAW recognises the right to social security, particularly in cases of retirement, unemployment, sickness, invalidity and old age and other incapacity to work, as well as the right to paid leave.
3.11 The Bills support these rights by requiring employers to make eligible superannuation contributions on a more frequent basis, based on the day their employees are paid salary or wages. The amendments to calculate SG shortfalls, and therefore the SG charge components, further provide incentive to employers to make on-time contributions for the benefit of employees to reduce their SG shortfall liability and any associated SG charge amounts. Employers are similarly incentivised to submit voluntary disclosures to reduce their SG shortfall liability, facilitating more accurate SG shortfall assessments.
3.12 As such, these amendments help bolster employees' social security at retirement stage, by combating unpaid and underpaid superannuation.
The right to a standard of living and security
3.13 Article 25(1) of the UDHR recognises that everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, and the right to security in the event of old age.
3.14 The Bills will support this right by encouraging employers to pay the correct amount of superannuation, therefore ensuring employees are paid the right amount of superannuation in a timely manner. This will contribute towards the family's financial security in old age, supporting their right to an adequate standard of living in retirement.
Conclusion
3.15 These Bills are compatible with human rights as it promotes employees' right to social security at old age by improving the frequency and transparency of superannuation guarantee payments.