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The consequences of getting payroll wrong can be damaging

By Jack Campbell | |5 minute read

People work to be paid. When this process is disrupted, discontent can fester and reputations can be damaged. Getting payroll right should be a priority for every employer.

Establishing effective processes and upholding them is key to maintaining a healthy payroll system. Its importance extends to all corners of the business, whether that be employee satisfaction, company image, or compliance.

“Ensuring payroll accuracy is crucial for maintaining trust and morale among employees in any organisation. It’s not just about fulfilling a financial transaction,” commented Tracy Angwin, Australia Payroll Association’s executive director.


“When payroll is managed effectively, it signals to staff members that the company values their contribution and commitment. Given the complexity of Australia’s industrial relations system, the margin for error is narrow.”

Payroll should be integrated into strategy. Understanding the benefits a strong system can bring and consistently working to uphold this system is imperative.

Affinity Payroll chief revenue officer Joel Smith agrees: “Getting payroll right should be a critical strategic initiative for all organisations. It reflects a company’s reliability and respect for [its] workers. Accurate payroll also plays a significant role in financial management and forecasting. Businesses can avoid unexpected financial liabilities and maintain a positive organisational image by ensuring payroll accuracy, which is essential for attracting and retaining top talent in today’s competitive job market.”

The consequences of getting it wrong are far-reaching. Not only can legal issues arise, but morale and reputation can also take a significant hit.

Angwin continued: “The repercussions of payroll inaccuracies extend beyond financial penalties. They can erode trust, affect employee morale, and tarnish a company’s reputation … Businesses must understand that the cost of non-compliance and errors can extend to losing talented individuals who no longer feel valued or secure.”

In the current competitive job market, where skilled workers are often hard to come by, retention can be diminished through ineffective payroll.

“Getting payroll wrong can have a significant impact on employee satisfaction and retention. Payroll discrepancies can make an organisation seem outdated and inconsiderate of their staff members’ financial wellbeing, especially in the digital age where workers seek and expect transparency and immediacy. This perception can be particularly damaging in competitive industries where the ability to attract and retain skilled professionals is critical to a company’s success,” said Smith.

Eliminating underpayments should be on every employer’s radar. Aside from the legal ramifications, keeping a business’s most important asset happy, its people, should be top of mind.

Tech and training can be effective ways of managing this, explained Angwin: “Addressing underpayments effectively involves a detailed approach. Initially, the key is to invest in payroll staff education and training. Staff must be well-versed in the complexities of award interpretations and compliance regulations. And, of course, embracing technology can play a pivotal role in minimising errors. Implementing advanced payroll systems and tools that help navigate these complexities can greatly enhance accuracy and efficiency.”

Smith agreed: “Businesses should embrace modern payroll solutions that provide flexibility and accuracy. The shift towards pay-on-demand services is one example of how technology can address employees’ immediate financial needs while also offering employers a competitive edge. Additionally, adopting cloud-based payroll systems that update automatically according to the latest tax regulations and reflect legislation, such as award rates and enterprise bargaining agreements, can reduce the incidence of underpayments substantially, ensuring all workers are paid correctly and on time.”



Compliance often refers to a company's and its workers' adherence to corporate rules, laws, and codes of conduct.


Training is the process of enhancing a worker's knowledge and abilities to do a certain profession. It aims to enhance trainees' work behaviour and performance on the job.

Jack Campbell

Jack Campbell

Jack is the editor at HR Leader.