Payday Super and subcontractors: what general contractors actually owe

From 1 July 2026, every employer in Australia has to pay superannuation guarantee (SG) at the same time as wages — same payday, not once a quarter. The Treasury Laws Amendment (Payday Superannuation) Act 2025 is now law, and SG contributions generally need to reach an employee’s fund within 7 business days of payday. For a general contractor, the natural assumption is “this is a payroll problem for our direct staff, not something that touches our subcontractor network.” That assumption is only half right.

The subcontractor test most Principal Contractors have never had to think about

A genuine subcontractor — a business invoicing you under its own ABN, quoting a price, bringing its own tools and insurance — isn’t an employee, and payday super doesn’t touch that relationship. But superannuation law has had a second, broader definition of “employee” since 1992 that most Principal Contractors have simply never had reason to look at: under section 12(3) of the Superannuation Guarantee (Administration) Act, someone working under a contract that’s wholly or principally for their labour is treated as an employee for super purposes — regardless of whether they hold an ABN, quote a fixed price, or call themselves a contractor. It isn’t an anti-avoidance rule aimed at dodgy arrangements; it’s a deliberate policy choice that applies to completely above-board engagements.

The distinction that matters is whether you’re paying for a contractor’s labour or paying for a result. A subcontractor bringing their own crew, plant, and materials to deliver a defined scope is a genuine business-to-business engagement. A sole trader you’ve engaged to personally do the work, paid an hourly or daily rate, supervised the same way as your own crew, is a much harder case to argue isn’t “mainly for labour” — and if it isn’t, you owe them super, ABN or not.

Why this gets more painful under payday super, not less

Under the old quarterly system, a wrong classification was a slow-building problem — get it wrong for a quarter, maybe catch it before the next BAS cycle. Under payday super, the same mistake compounds every single pay run, and the SG Charge (the penalty regime for a late or missed payment) is deliberately more expensive than just paying correctly in the first place. A handful of individual subcontractors on your books who genuinely are “mainly for labour” turns a classification nobody’s revisited in years from a quarterly exposure into a weekly-recurring one.

What’s worth doing before 1 July 2026

Not every subcontractor needs re-assessing — a subcontracting company bringing its own crew, or a trade quoting and invoicing a defined scope of work, sits clearly on the “genuine business” side of the line. The ones worth a second look are individual, ABN-holding tradies engaged personally, paid by time rather than by the job, and supervised day to day the way an employee would be. That’s a conversation worth having with your accountant per engagement, not a blanket policy — but worth having before the payment cycle tightens, not after the first missed payday triggers a charge.

Worth noting: Novato doesn’t handle payroll or superannuation directly, so this isn’t something the platform checks for you. But the worker-management question Novato already asks every subcontractor at engagement — solo, or bringing their own crew — turns out to be a useful first signal for this exact classification question too, since it’s asking a closely related thing: is this genuinely their own independent operation, or effectively one person’s labour engaged directly.