- Payday Super started 1 July 2026 and super now moves every payday.
- Super must reach the employee's fund within 7 business days of payday.
- Late super interest now compounds daily at the GIC rate.
- Outsourcing usually wins at multiple states, multiple awards or a missed deadline.
Payroll outsourcing in Australia means handing pay runs, PAYG withholding, Single Touch Payroll reporting and super guarantee payments to an external provider. Since Payday Super commenced on 1 July 2026, super must reach an employee’s fund within 7 business days of each payday, which has raised the compliance cost of running payroll in-house. Outsourcing becomes worthwhile once a business has employees across multiple states, multiple awards, or has already missed a super deadline.
The rule change matters more than the admin. Paying super late now costs you interest that compounds daily, and the ATO works out the bill rather than waiting for you to declare it. If you are weighing up outsourced payroll services in Australia against keeping it in-house, the honest comparison starts with what each option actually costs you in money, time and risk.
What changed when Payday Super started on 1 July 2026?
Payday Super commenced on 1 July 2026. Every Australian employer must now pay the super guarantee on each payday instead of quarterly, and the contribution has to be received by the employee’s fund within 7 business days after you pay them.
The old deadline was 28 days after the end of the quarter. That gap gave employers a buffer of weeks; the new rule gives you a little over a working week, every single pay cycle.
Four other changes came with it, and each one moves risk onto the employer:
- The calculation basis moved from ordinary time earnings to qualifying earnings, which picks up commissions and salary-sacrifice amounts.
- The super guarantee charge is now assessed by the ATO rather than self-assessed, so you no longer lodge a super guarantee statement.
- Late-payment interest compounds daily at the general interest charge rate, replacing the old flat 10% per year.
- The administrative uplift component of the charge is now tax deductible, which the old charge was not.
Payday Super also applies to independent contractors you pay mainly for their labour. That catches out businesses who assumed a contractor sits outside the super system entirely.
The super guarantee rate is 12.00% for both 2025-26 and 2026-27. The maximum contribution base is $62,500 per quarter for 2025-26, moving to $270,830 annually for 2026-27 under the new regime. For the full mechanics of complying, read our Payday Super employer guide.
What does outsourced payroll actually cover in Australia?
“Payroll” is a bundle of jobs, and providers differ on how many of them they take. Knowing the full list is what lets you compare quotes properly.
A full-service Australian payroll engagement generally covers:
- Calculating gross pay, PAYG withholding and net pay for each employee.
- Interpreting the relevant modern award for rates, penalties, overtime and allowances.
- Lodging Single Touch Payroll reporting to the ATO on or before each payday.
- Calculating and remitting super so it lands within the 7-business-day window.
- Producing payslips and maintaining employee records.
- Handling leave accruals, terminations and final pay calculations.
- Managing state payroll tax registration and lodgement where thresholds are crossed.
Two items on that list are where most in-house payroll comes unstuck: award interpretation and the super deadline. Both are also the most expensive to get wrong.
What does running payroll in-house really cost you?
There is no credible industry-average figure for this, and any article quoting one is guessing. The honest approach is a framework you fill in with your own numbers.
Your real in-house cost is the sum of four things:
- Time per pay run multiplied by pay frequency multiplied by what an hour of your time is worth.
- Software subscription for the payroll platform you use.
- Setup and correction time when an award rate changes or an employee’s circumstances shift.
- Error exposure, which is now larger because interest on late super compounds daily.
Work it out honestly. If a fortnightly pay run for eight staff takes you two hours including the super and STP steps, that is 52 hours a year before a single mistake. Price those hours at what you would otherwise bill or what you would pay someone to do your actual job, and the number usually surprises people.
The fourth item is the one that changed in July. Under the old quarterly system a forgotten payment was often caught inside the buffer. Under a 7-business-day rule with daily compounding interest, the same lapse starts costing money almost immediately.
What does outsourced payroll cost?
Outsourced payroll is normally priced as a fixed monthly fee, often with a base fee plus a per-employee rate. The shape matters as much as the number: a fixed fee is predictable, which is precisely what an hourly-billing accountant is not.
For current Sleek payroll pricing, check Sleek’s pricing directly rather than relying on a figure quoted in an article, because plans and inclusions change.
When comparing quotes, ask three questions that separate genuinely comparable offers:
- Is super remittance included, or only the calculation?
- Is award interpretation included, or billed as advice when you ask?
- Who lodges STP, and who is responsible if a lodgement is late?
In-house, software or outsourced: which model fits?
The three models differ mainly in who does the work and who carries the risk when something goes wrong. Software helps you do payroll; a provider does payroll for you.
| Dimension | Run it in-house | Payroll software only | Outsourced payroll |
|---|---|---|---|
| Who calculates pay and super | You | You, software assists | Provider |
| Who lodges STP | You | You | Provider |
| Payday Super 7-business-day exposure | Yours | Yours | Provider-managed |
| Award interpretation | You | Limited | Provider |
| Multi-state payroll tax | You | You | Provider |
| Cost shape | Time + software | Subscription | Fixed fee |
| Who carries the error risk | You | You | Shared, confirm in contract |
| Best suited to | One or two salaried staff, one award, one state | Stable headcount with in-house admin capacity | Multi-state, multi-award, or growing headcount |
Read the error-risk row carefully before you sign anything. “Shared” is the honest description, and the contract is where the split is actually defined.
Does it cost extra to add payroll?
This is the question Australian business owners ask most often, and the answer depends on what your current arrangement already includes. Payroll is usually priced as a separate service line rather than bundled into a general accounting fee.
Where it is bundled, the inclusion is normally capped at a headcount. Ask what happens at the cap, because that is where an apparently cheap plan starts adding per-employee charges.
Two follow-up questions are worth asking any provider, including us:
- How many employees does the quoted price cover, and what does each additional employee cost?
- Are terminations, final pay calculations and out-of-cycle pay runs included or billed separately?
At what point does outsourcing win?
The maths flips at identifiable triggers rather than at a headcount number. Any one of the following is usually enough to make outsourcing the cheaper option once risk is priced in.
- You hire your first employee. The jump from paying yourself to running a compliant pay run is the single biggest step up in complexity.
- You have staff in more than one state. Payroll tax is a state tax with different thresholds and rates in each, and you may need to register for payroll tax in several.
- Your staff sit across more than one modern award. Award interpretation is where underpayment claims begin.
- You have already missed a super deadline once. Under daily compounding interest, a repeat is materially more expensive than it used to be.
- Your headcount is growing. Time per pay run rises faster than headcount, because exceptions multiply.
Cross two or more of these and the decision is usually clear. Cross none of them and you probably should not outsource yet.
When is outsourcing payroll not worth it?
Plenty of Australian businesses do not need this. Saying so is more useful than pretending every reader is a candidate.
You can comfortably keep payroll in-house if you are a single-director company with no employees, since there are no pay runs to manage beyond your own drawings or director’s fees. The same applies to a business with one or two salaried staff on a single award, in one state, with no payroll tax exposure and a stable roster.
In those cases payroll software plus twenty minutes a fortnight does the job. Revisit the decision when you hire your third employee, cross a state border, or take on staff under a second award.
Will they be on payroll or will they be contractors?
This question decides which obligations apply, and getting it wrong is expensive. The classification follows the substance of the working relationship, not the label on the agreement or whether the worker has an ABN.
The important point for payroll planning is that super is not the dividing line people assume. Super guarantee obligations extend to independent contractors paid mainly for their labour, and Payday Super applies to those payments too.
If you are unsure how a worker should be classified, resolve it before the first payment rather than after, because corrections reach back across every pay period. Our guide to superannuation guarantee obligations covers who is covered.
What can go wrong with in-house payroll?
Three failures account for most payroll trouble in Australian small businesses, and all three became more costly this year.
- Late super. Miss the 7-business-day window and the ATO assesses the super guarantee charge, with interest compounding daily at the GIC rate. See our guide on paying super late.
- STP reporting failures. Single Touch Payroll must be lodged on or before payday, and missed or incorrect lodgements accumulate quietly until they surface at year end.
- Misclassification. Treating an employee as a contractor creates backdated super, PAYG and potentially leave entitlements.
Each of these is recoverable if caught early. The pattern that hurts is a small error repeated across many pay periods before anyone notices.
What actually transfers when you switch payroll providers?
Migration anxiety is the most common reason businesses stay with an arrangement that is not working. The transfer is more mechanical than most people expect.
A provider taking over your payroll will need:
- Year-to-date gross, PAYG and super figures for every employee.
- Employee records including TFN declarations, super fund details and start dates.
- Award classifications and pay rates for each role.
- Leave balances for annual, personal and long service leave.
- Your ATO STP software ID and current lodgement history.
The cleanest switch point is the start of a financial year, because year-to-date figures reset. A mid-year switch is still routine, it just requires the incoming provider to carry those balances across accurately.
If you are changing your accountant at the same time, our guide on small business accountant services covers what to look for in a combined arrangement.
How does Sleek help with payroll in Australia?
Sleek runs payroll as a managed service for Australian businesses, covering pay runs, PAYG withholding, STP lodgement and super remittance inside the Payday Super window. You get a fixed monthly fee and one point of contact rather than an hourly bill that varies with how complicated your month was.
We also handle the adjacent work that payroll tends to drag in, including payroll tax registration when you cross a state threshold. For broader guidance across compliance topics, browse Sleek’s AU knowledge base.
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FAQs on payroll outsourcing australia
How much does payroll outsourcing cost in Australia?
Outsourced payroll is usually priced as a fixed monthly fee, commonly structured as a base fee plus a per-employee rate. The total depends on headcount, pay frequency, award complexity and whether super remittance and STP lodgement are included. Ask providers to quote on the same inclusions so the comparison is real. Check the Sleek pricing page for current figures rather than relying on a number quoted elsewhere.
How does payroll outsourcing work day to day?
You send through hours, leave and any changes before each pay cycle, and the provider does everything after that point. They calculate gross and net pay, withhold PAYG, lodge STP on or before payday, issue payslips and remit super to each employee’s fund. You approve the pay run before it is processed, so nothing leaves your account without sign-off.
Do I still control payroll if I outsource it?
Yes. You approve each pay run, you set pay rates and you decide on bonuses, terminations and pay increases. The provider executes and carries the compliance mechanics. What you give up is the administration, not the authority.
How many employees do you need before outsourcing payroll is worth it?
There is no universal headcount, because complexity drives cost more than employee numbers do. A business with three staff across two states and two awards is harder to run than one with eight salaried staff on a single award in one state. Use the trigger list in this article instead of a headcount rule.
What happens if super is paid late under Payday Super?
If the contribution does not reach the employee’s fund within 7 business days of payday, the ATO assesses the super guarantee charge rather than waiting for you to self-assess. Interest compounds daily at the general interest charge rate, replacing the previous flat 10% per year. The administrative uplift component of the charge is now tax deductible, though the underlying shortfall still has to be paid.
Can I outsource payroll but keep my current accountant?
Yes, and many businesses do this while they evaluate a provider. Payroll data needs to reach whoever prepares your accounts, so agree the handover format and timing upfront. Running both under one provider removes that coordination step, but it is not a requirement.
