Getting on top of persistent payroll issues in 2025

Wage theft watch-out: The criminalisation of wage theft should be the catalyst for businesses to ensure compliance dramas are not a feature in the new year, writes Brian Donn.

Ensuring employees receive the correct remuneration and entitlements may sound like human resources 101, but here in Australia, it can be anything but.

For many organisations, it’s a highly complex business, with pitfalls everywhere for HR and payroll teams.

In recent years, we’ve seen a string of big players come unstuck. For example, in 2021, the Fair Work Ombudsman launched legal action against one of Australia’s major grocery retailers, alleging it had underpaid more than 7,500 salaried employees to the collective tune of $115 million.

The stakes are rising

Now that wage theft has been criminalised in this country – the legislation comes into effect on 1 January 2025 – we can expect to see the workplace regulator devoting more resources to investigating employers that, inadvertently or otherwise, are getting it wrong.

While the full force of the law will be reserved for those that are proven to have intentionally underpaid workers, businesses that have made honest errors are required to rectify them and reform their processes.

Doing so can be time-consuming and expensive, particularly if there’s a pattern of underpayments stretching back months and years.

As always, prevention is better than cure. Here are some tips to help your organisation minimise mistakes and ensure you’re getting it right.

Review your awards and classifications

Australia’s system of awards is among the most complex in the world. Determining the applicable award or awards for your workforce is one thing; making sure your employees are correctly classified is quite another. If someone has been performing higher duties, for example, they may be entitled to be paid as a level four or five, rather than at the level three rate they’re down to receive.

Trouble is that no one may have thought to let the HR department know that an employee has stepped into a different interim role and needs to be remunerated accordingly. That’s why conducting regular reviews of your team’s roles, responsibilities, and classifications is essential. Fail to do so and you run the risk of a bill for back pay you’ve failed to budget for.

Stay on top of your superannuation obligations

Recent years have seen the Australian Taxation Office get serious about superannuation, specifically about making sure hardworking Australians aren’t being shortchanged on their retirement savings by unscrupulous employers.

The penalties are steep for those that don’t meet their legal obligations – delinquent payers can expect to be hit with a penalty of 200 per cent on top of the original amount owed, along with interest and admin fees. Those penalties will be harder to avoid when Payday Super is introduced, and employees are able to keep track of their entitlements more easily. That’s not slated to happen until July 2026, but now’s the time to put systems in place to ensure you’re remitting the right amounts of super, at the right times.

Train your team

Keeping up with legislative changes is a full-time job for industrial relations specialists. Regular training will help your payroll team stay on top of the ones that affect your organisation.

Your line managers may also need to be brought up to speed on emerging employment and compliance issues – think casual conversion, for example, and the question of whether employees are allowed to claim for those couple of extra minutes of overtime they’ve been asked to put in. While these may not be payroll issues per se, they influence what employees are entitled to receive.

While the responsibility of staying compliant doesn’t rest on the shoulders of employees, they can be part of the solution. Encourage workers to ensure they’re regularly reviewing their pay slips and reporting any discrepancies in pay to help identify and resolve small issues if they arise.

Turn to technology

The risk of payroll errors is significantly higher for organisations that continue to operate in manual mode, using paper printouts and spreadsheets to monitor rosters and calculate employee entitlements. Left undetected and unrectified, such errors represent a compounding risk; one that could have a significant impact on your financial position when the mistakes eventually, inevitably, come to light.

That’s why an increasing number of businesses are turning to automation technology to eliminate errors and strengthen payroll and compliance across the rostering and payroll cycle.

Opting for a cloud-based platform that’s updated continually to reflect the latest changes to local employment awards and one that can be customised to accommodate any enterprise bargaining agreements your organisation has in force will help support the integrity and accuracy of your payroll processes, now and into the future.

Brian Donn is the managing director in Asia-Pacific and Japan at Dayforce.