7 Common Payroll Mistakes Australian Employers Make (and How to Avoid Them)

The High Cost of Payroll Errors

Payroll might seem straightforward – pay people for the hours they work – but in practice it’s a minefield of regulations, award provisions, and entitlements. Mistakes in payroll can cost employers dearly in Australia. We’re not just talking about a disgruntled employee; we mean massive fines, back-pay orders, and even criminal charges in some cases. High-profile underpayment scandals at companies like Woolworths and 7-Eleven have shown that even big businesses get it wrong, leading to headlines about wage theft and huge remediation bills. For smaller employers, a payroll mistake can mean years of back-paying employees money you hadn’t budgeted, plus penalties. The cost isn’t only financial – your reputation and employee trust are on the line too.

To illustrate: in 2025, Woolworths was ordered to pay a record $50 million in penalties by the Federal Court for systemic underpayment of staff over many years. This came after they self-reported nearly $390 million in unpaid wages and overtime to about 4,500 employees. Similarly, 7-Eleven’s franchise network had to repay $173 million to workers after investigations found deliberate underpayments and falsified records. These cases spurred tougher laws – as of Jan 1, 2025, deliberate wage theft is a criminal offence in some jurisdictions. Clearly, the stakes are high.

For Australian employers, the message is clear: payroll compliance is not optional. In this article, we’ll count down 7 common payroll mistakes employers make – from miscalculating casual loadings to mismanaging leave and records – and provide tips on how to avoid each pitfall. Whether you have one employee or one thousand, avoiding these mistakes will help keep your business on the right side of Fair Work and your employees paid correctly.

Let’s get into it.

Mistake 1: Miscalculating Casual Loading

Casual employees are entitled to a loading on their base pay (typically around 25%, though it can vary by award or agreement) to compensate for not having paid leave and other benefits. A common payroll mistake is miscalculating this casual loading – either not paying it at all when required, or calculating it incorrectly on certain hours.

Some scenarios where employers trip up:

• Forgetting to apply the loading: This often happens when a business transitions someone from part-time to casual and overlooks adding the loading. If an award stipulates a 25% casual loading and you’ve been paying the casual the base rate only, you’ve underpaid them by 25% every hour – a serious shortfall.

• Not compounding correctly for overtime/penalties: Under many awards, casual employees get their 25% loading in addition to any penalty rates. For example, if a casual works on a Sunday at time-and-a-half penalty, they should get 150% (Sunday penalty) plus 25% casual loading – effectively 175% of base. Some employers mistakenly pay only 150% thinking it already covers everything. It’s important to read the award: most say “casual gets X% loading on top of all rates.” If you only pay one or the other, you’re underpaying. However, note some modern awards have specific loaded rates for casuals on weekends (e.g. might say 175% is the Sunday rate for casual, which already includes the loading). The mistake is when employers assume the loading isn’t needed or double count it. Always use the award pay guides.

• Misclassifying someone as casual: Another angle – an employee working regular full-time hours but labeled “casual” for flexibility. If they really should be permanent, you owe them entitlements; but also, if you don’t pay a casual loading because you think of them as permanent, you’re in breach. Make sure every casual is paid the casual loading for every ordinary hour, as required.

How to avoid it: Check the applicable modern award or enterprise agreement for the correct casual loading percentage and how it applies. Use Fair Work’s Pay Calculator to confirm casual rates. Ensure your payroll system has a separate pay category for casuals with the loading built-in. When calculating overtime or holiday rates, confirm whether it’s “penalty rate plus loading” or a special casual penalty (often it’s plus). If you’re unsure, contact the Fair Work Ombudsman or a payroll professional. Regular audits can catch if any casual was paid at base rates accidentally.

Miscalculating casual loading can lead to significant underpayments over time – something regulators crack down on. In fact, one of the contributors to the Woolworths underpayment case was mispaying salaried staff who should have gotten overtime etc., but for casuals, simpler: just pay the loading on all hours. When in doubt, pay it – an employee getting a bit extra is better than underpaid (and you can adjust if needed).

Mistake 2: Forgetting Super on Some Payments (Overtime, Bonuses, etc.)

Superannuation Guarantee (SG) contributions must be paid on an employee’s ordinary time earnings (OTE). A very common mistake is employers either underpaying or overpaying super because they misunderstand what counts as OTE. Specifically:

• Forgetting to pay super on bonuses or certain allowances: Many employers think super is only on “base pay” and don’t realize that most bonuses, commissions, and even things like shift loadings or annual leave loading are considered ordinary earnings. For example, a quarterly performance bonus or a Christmas bonus does attract super – you need to contribute 11% (as of 2023) of that bonus to the employee’s super fund. If you omitted that, you owe back super (plus interest and potentially admin fees). The ATO clarifies that a bonus forms part of OTE unless it’s solely for overtime performanceandanteconsulting.com.aucommunity.ato.gov.au.

• Paying super on overtime when it’s not required: On the flip side, some employers might pay super on every dollar including overtime – not a compliance issue (employees won’t complain!) but it’s not legally required and can be a cost if not intended. The law says overtime payments are excluded from OTEcanstar.com.au. However, one nuance: if an employee’s contract doesn’t distinguish overtime (e.g. they’re salaried and no set ordinary hours, some parts might arguably be OTE). But typically, pure overtime (hours outside ordinary hours attracting a higher rate) is not OTE.

• Misclassifying hours leading to wrong super calc: For instance, some payroll systems might flag certain shift penalties incorrectly as “overtime” and thus exclude from super when they shouldn’t. Or if someone is on an annualised salary and you’re not tracking overtime, you might inadvertently exclude needed super.

How to avoid it: Familiarize yourself with what counts as Ordinary Time Earnings. According to the ATO, OTE includes regular salary/wages, shift allowances, bonuses, commissions, paid leave, and loadings like annual leave loading (unless demonstrably for overtime)intheblack.cpaaustralia.com.au. It excludes: overtime payments (if clearly marked as such), reimbursements, and certain leave payouts on termination. A helpful reference is the ATO’s list of payments and whether they are OTEato.gov.au.

Make sure your payroll software is configured correctly – most modern software knows to include bonuses and exclude overtime for super, but only if you categorize pay items properly. If you give a bonus, mark it in the system as OTE.

Also, keep an eye on the super rate (gradually rising to 12% by 2025). Always pay super by the quarterly deadlines to avoid SGC penalties. If you discover you forgot to pay super on, say, last year’s bonus, you should lodge a Superannuation Guarantee Charge statement and pay the owed super plus interest – it hurts (because the interest and penalties aren’t tax-deductibleintheblack.cpaaustralia.com.au), so better to get it right initially.

One more thing: as of 2022, there’s no $450 monthly threshold anymore – you pay super on all OTE for all employees (even those who earn little). Don’t inadvertently miss new low-earning casuals, etc., thinking old rules apply.

Mistake 3: Wrong Public Holiday Pay Rates

Public holidays can be tricky, especially in industries that operate 24/7. A frequent mistake is not paying the correct public holiday rates or not complying with public holiday rules. Some examples:

• Not paying the penalty rate for work on a public holiday: Most awards and agreements prescribe a higher rate for any hours worked on a public holiday (often 2x or 2.5x the normal rate). If an employee works on, say, Australia Day or Christmas Day, and you pay them just their normal rate (or forget to apply the holiday penalty), that’s an underpayment. For instance, under the Retail Award, work on a public holiday is paid at 250% for full/part-timersquickbooks.intuit.com. Underpaying here can add up, since public holiday penalties are steep.

• Confusion over substitute holidays or days in lieu: If an employee doesn’t work on a public holiday because it’s their day off, full-timers/part-timers usually still get paid their base for that day (as a paid day off) if it’s a day they normally would work. Some small employers mistakenly think if the store is closed they don’t have to pay staff – but if it’s a public holiday and that employee normally works Mondays, you do have to pay their base hours for that day even though they didn’t work. Conversely, some might pay double by mistake. Also, when holidays are substituted (e.g. the public holiday is observed on Monday because actual fell on weekend), ensure you apply correct day.

• Requiring work without consent: The Fair Work Act gives employees the right to reasonably refuse to work on a public holiday. Employers must not automatically roster someone on a public holiday without considering their personal circumstances or getting their agreement. Recently, BHP had to compensate workers because it effectively forced them to work Christmas without properly askingabc.net.au. While this is more of a legal compliance issue than a payroll calc, it’s a related mistake – failing to recognise an employee’s right to a day off or not paying penalties if they do work. Always discuss public holiday rosters in advance and document any agreement.

• Not applying minimum shift rules on holidays: Some awards have minimum engagements or special rules for public holidays (e.g., at least 4 hours pay even if called in for 2). Forgetting those means underpayment.

How to avoid it: Plan ahead for public holidays. Use the Fair Work Ombudsman’s resources: there’s a page for public holiday entitlements and a list of public holidays by state. Check your award for the exact penalty rate: is it double time, or double time and a half? Many are 250%. Set your payroll system to apply the correct multiplier for any hours flagged as public holiday work. If your business operates on holidays, it might be wise to have a policy or remind managers of the pay requirements and the need to ask staff if they can work (rather than mandating).

Also ensure non-working day payments: For full-time/part-time staff, if a public holiday falls on their normal work day and they have it off, pay them their standard hours at base rate (no penalty since they didn’t work). Casuals generally only get paid if they actually work the holiday (but then they get the penalty rate which usually already includes casual loading at an inflated levelquickbooks.intuit.comquickbooks.intuit.com).

Keep track of regional holidays too (e.g. Melbourne Cup Day, local show days) – missing those can cause issues if your staff are in those regions.

Mistake 4: Incorrect Annual Leave Accrual

Annual leave seems simple (four weeks per year for full-timers, pro rata for part-timers), yet many payroll systems or employers get the accrual calculations wrong. Common errors include:

• Accruing leave based on the wrong hours: Full-time employees should accrue roughly 152 hours of annual leave per year (which is 4 weeks × 38 hours). That’s about 2.923 hours per week (or 7.692% of hours worked if using that method). If an employer mistakenly accrues too little or too much – for example, only accruing on ordinary hours and excluding paid leave hours (which should still accrue leave) – the balance can be off. Conversely, including overtime hours in accrual when not required could give too high an accrual (though over-accrual doesn’t usually get you in trouble with FWO, it’s just more generous).

• Not adjusting for part-time hours properly: Part-timers accrue leave in proportion to their hours. If a part-timer’s hours changed, you must ensure your system correctly accrues going forward on the new hours. Some mistakes happen if employers try manual calculations and forget to update it.

• Leave loading not considered in accrual payout: While not exactly accrual, a related error is paying annual leave at base rate and not including regular penalties the employee would have gotten. By law, when an employee takes annual leave, they should get paid as if they worked normally – meaning if they ordinarily get penalties, their leave pay should reflect thatintheblack.cpaaustralia.com.au. Many awards simplify this by requiring leave loading (usually 17.5%). A mistake is paying just base pay for leave taken when an award says add 17.5%. This results in underpayment during leave. Ensure your payroll applies leave loading if applicable.

• Not accruing leave on certain types of leave or during workers comp (when required): Under the NES, annual leave does not accrue on unpaid leave (like unpaid parental leave), but it does accrue on paid leave (e.g. personal leave, annual leave itself, public holidays, community service leave, etc.). Some employers accidentally pause leave accrual if an employee is on paid parental leave or workers’ compensation – but actually, paid leave and periods of workers comp (up to 52 weeks in NSW for example) still count as service for accrual. Check your local rules and don’t stop accrual improperly.

• “Cashing out” leave incorrectly: Not an accrual issue per se, but a compliance one – some employers allow or require staff to cash out leave to reduce accruals, but if done, it must meet strict conditions (written agreement, 4-week balance remains, etc.). Doing this wrong can count as not providing proper leave.

How to avoid it: Use a reliable payroll system that automatically accrues leave each pay period according to the standard formula (usually 1/13 of hours for a 4-week cycle if employee works 38 hours, etc.). Regularly audit a couple employees’ accruals: after a year, did they get close to 152 hours (adjusted for any unpaid periods)? If not, investigate.

Be mindful of changes in work patterns – if someone goes from full-time to part-time, their existing accrued hours stay (you don’t pro-rata what they already earned), but going forward they accrue slower. Communicate with employees about their leave balances – sometimes mistakes are caught when an employee questions “my balance seems off.”

Also, always pay leave correctly: if an award says “annual leave is paid at the rate the employee would have earned had they worked, including penalties,” follow that. Many employers simply add 17.5% loading as an approximation of penalties. Don’t omit the loading if it’s requiredfairwork.gov.au.

Mistake 5: Missing Long Service Leave Obligations

Long Service Leave (LSL) is an often-overlooked entitlement because it accrues over such a long term and laws differ by state. Employers, especially small ones, might forget to track LSL or be unaware when an employee becomes eligible. Mistakes include:

• Not recognizing pro-rata LSL on termination: As discussed earlier, many states require paying out pro-rata LSL if an employee with, say, 7+ years leaves. If an employer isn’t aware, they might terminate someone after 8 years and not pay any LSL, thinking 10 years is needed. That employee could later claim their pro-rata entitlement. Example: In Victoria, after 7 years service, even if an employee resigns, they’re entitled to a pro-rata payout of LSLau.indeed.comau.indeed.com. If you miss that, it’s an underpayment on termination.

• Not allowing LSL to be taken when due: Some employers don’t have a policy or tracking, so an employee hits 10+ years and nobody talks about long service leave. The employee may request it and the employer scrambles or, worse, denies it incorrectly. Each jurisdiction has rules on when leave can be taken (often after 7 or 10 years). If an employee is entitled and requests LSL, you generally must grant it within a reasonable period.

• Calculating LSL incorrectly: The calculation can be complex if the employee’s hours or salary changed over time. Typically, you have to calculate the payment based on the average weekly wage over the past 5 years (or similar) or the current wage, whichever is higher, depending on the state. Also, including commissions or regular bonuses in the “average” if required. Many employers assume it’s just current weekly pay × weeks of LSL, but some laws say use higher of last 5-year average or last 12 months average, etc. Tracy Angwin (payroll expert) notes: “The first thing to know about LSL is it’s always calculated in weeks… valued according to average weekly earnings including bonuses and commissions over a set period, varying by state”intheblack.cpaaustralia.com.au. If you ignore the average and just use base, you might underpay someone who had higher earnings in the past.

• Ignoring state-by-state rules: For national employers, one might incorrectly apply NSW rules to a VIC employee. Or not realize that casuals in some states accumulate LSL (NSW, for instance, covers casuals who stay long-term). Missing that a long-term casual is eligible for LSL is another underpayment risk.

How to avoid it: Keep track of employees’ lengths of service. When someone nears the threshold (say 7 years), review the state legislation. It’s wise to maintain an internal LSL policy summarizing the rules in your state, and update it if laws change. The Indeed guide or state government websites are good starting points for each state’s requirementsau.indeed.comau.indeed.com.

When calculating a long service leave payout or period of leave:

• Confirm the entitlement (e.g. 8.667 weeks after 10 years in many states, then pro-rata beyond).

• Use the correct rate calculation – e.g., in NSW, if someone’s hours fluctuated, you take average weekly hours in the past 5 years. In VIC, it’s average over last 12 months or last 5 years, whichever is greater, including regular bonusesintheblack.cpaaustralia.com.au.

• If you don’t have expertise, get advice or use calculators provided by state authorities (Business Victoria has an LSL calculatorau.indeed.com, WA’s Commerce dept has one, etc.).

Also set aside financial provision for LSL – it’s not required by law to prefund it (except in ACT for portable schemes in some industries), but budgeting for it avoids panic when a big payout comes due.

Mistake 6: Late Final Pay

Delaying a departed employee’s final payment is another common mistake. Whether it’s because the payroll cycle is a week away or admin slowness, not paying final pay on time can breach awards and cause disputes. The Fair Work Ombudsman deems it best practice (and most awards mandate) that final pay is made within 7 days of terminationfairwork.gov.au. Mistakes include:

• Waiting until the next scheduled payday even if that’s weeks away: If an employee resigns and your next pay run isn’t for 3 weeks, you might think it’s fine to pay then. But many awards say 7 days. If the employee presses, legally you’d likely need to pay within 7 days. Some employers genuinely don’t know this and follow their normal schedule, inadvertently breaking the award rule.

• Forgetting components in final pay: Maybe you pay out the wages but forget the accrued annual leave, or forget to include leave loading on that leave payout, etc. That’s an error – final pay must include all entitlements (wages, leave, notice, redundancy, etc.). Omitting one piece means the final pay is incomplete and late when eventually corrected.

• Withholding final pay pending return of property or exit procedures: Some employers mistakenly hold the final paycheck until the employee does an exit interview or returns equipment. You cannot do that (except deduct authorized amounts as discussed). Final pay isn’t a bargaining chip – it’s the employee’s legal entitlement and must be paid on time. If there are issues like unreturned tools, handle them separately.

• Not giving separation paperwork: Not a pay calculation error, but an important compliance step – failing to provide a separation certificate when required can cause penalties. It ties into finalization tasks.

How to avoid it: Have a clear offboarding process. The moment you know someone is leaving (either resignation or termination date set), schedule their final pay calculation. Don’t wait for the normal cycle if that will breach the 7-day guideline. You can do an ad-hoc pay run for them. Calculate:

• All hours worked since last pay,

• Pay in lieu of notice (if applicable),

• Unused annual leave (with loading if applicable),

• Long service leave payout (if applicable),

• Redundancy pay (if applicable),

• Any other item (like accrued RDOs, etc.).

Double-check the math and have someone review it if possible (two sets of eyes). Then pay it out promptly. Document the breakdown for the employee.

By paying promptly, you avoid possible claims. If an award specifically gives a timeframe (7 days in most), you’ll meet it. The employee will appreciate the promptness too; nothing sours an exit more than having to chase money.

Also remember to pay out things even if the employee doesn’t ask – it’s on you to know what they’re owed. Sometimes employees forget about their entitlements; that doesn’t excuse not paying. Fair Work can still come knocking from a complaint later.

Late final pays were highlighted by Fair Work in some cases as part of underpayment disputes (it’s often rolled into other contraventions). It’s an easily avoidable issue with good organization.

Mistake 7: Not Keeping Proper Records

Record-keeping might not sound like “payroll calculation,” but poor records lead to miscalculations and an inability to demonstrate compliance. Under the Fair Work Act, employers must keep time and wages records for 7 yearsliquidhr.com.auliquidhr.com.au. Not keeping proper records is itself a breach (with hefty fines) and it often masks or exacerbates wage errors. Mistakes in this area:

• No accurate time records for hours worked: If you pay hourly or have overtime, not recording start/finish times or hours means you might underpay overtime or penalties. In the Woolworths case, they paid salaried managers a fixed amount but did not keep records of actual hours – leading to huge underpayments when those folks worked more hours than the salary coveredccfnsw.com. The court lambasted the lack of records. Legally, if records are inadequate, and an underpayment claim arises, the court may presume the employee’s claims about hours are correct. It flips the onus onto you if you didn’t keep records.

• Incomplete pay slips or missing details: Employers must give employees pay slips with specific info (gross, net, hours for casuals, super, etc.). If you don’t, employees might not notice mistakes in their pay, but when they do, you’ll have no paper trail to justify what was paid. Also it’s a breach on its own.

• Not keeping track of leave balances: Without proper records, you might grant more leave than earned or deny leave thinking none is left. Both create problems. Keeping an updated ledger of leave accrual and usage prevents mistakes in calculating what someone is owed (for example, when they resign, you need to know exactly how many hours of annual leave to pay out).

• Failing to update records for changes: e.g., not updating a pay rate after a birthday (junior rate increase) or after the annual minimum wage increase. If your records of what someone should be paid are outdated, you’ll pay wrong. Fair Work recently increased the national minimum wage; employers had to adjust from 1 July. If someone was on a base that needed lifting and you missed it due to poor record of their classification, that’s an underpayment.

• Lack of records for allowances or reimbursements: If you don’t keep receipts or logs for things like tool allowances, you might miss paying them or conversely pay too much without proof. While paying too much might not get you in legal trouble (unless it violates something else), it’s still a mistake.

How to avoid it: Implement a robust time and attendance system – whether it’s a modern app, bundy clock, or daily timesheets signed off. Make sure all overtime, breaks, and allowances are recorded. Legally, for each employee you should record: personal details, start date, hours worked (for casual/ hourly, or a note that they’re salaried full-time with an averaging if that’s the case), any overtime hours, loadings, allowances, deductions, super contributions, etc.liquidhr.com.auliquidhr.com.au.

Keep these records for at least 7 years. Most digital payroll systems will do this automatically. Conduct periodic self-audits – for example, Liquid HR suggests a compliance audit where you review record-keeping to ensure everything required is thereliquidhr.com.auliquidhr.com.au.

Also train whoever handles payroll on the importance of record accuracy. For instance, if a manager adjusts a time sheet, ensure the reason is documented.

Bear in mind, failing to keep or falsifying records is now subject to increased penalties. The law even has provisions that if you don’t have records and an employee alleges a breach, the employer has to disprove the allegation – a tough position if you have nothing on file.

In short: Document everything. It protects you as much as the employee. With good records, most of the previous 6 mistakes are also easier to avoid because you’ll have the data needed to calculate correctly.

How to Stay Compliant: Systems, Audits and Expert Help

We’ve covered seven common payroll mistakes – now, how do you ensure you don’t make them (or catch them quickly if you do)? Here are some strategies for payroll compliance:

• Use Reliable Payroll Software: Invest in a quality payroll system that is updated regularly for Australian laws. Modern software can automatically apply award rates, calculate leave, and prompt for things like super on bonuses. It can also generate compliant payslips and reports. Many mistakes above (like wrong rates or missed loadings) can be mitigated by software that knows the rules.

• Stay Informed of Changes: Subscribe to Fair Work Ombudsman updates or industry newsletters. Minimum wages, award conditions, superannuation rates, tax rules – these change. For example, new criminal penalties for wage theft came inieusa.org.au, super rate increases annually, and some states adjusted long service leave laws recently. Keeping informed helps you adjust payroll processes proactively.

• Conduct Regular Payroll Audits: Don’t wait for a complaint or inspection. Do an internal audit at least annually. Check a sample of employees: are they paid the correct base rate (compare to award or minimum)? Did all overtime get the right penalty? Are leave accruals correct? You might even hire an external HR consultant or use tools like the Fair Work pay and conditions tool to cross-check. As CPA Australia’s article notes, many companies started audits after the wave of underpayment newsintheblack.cpaaustralia.com.au – and often found issues. Better you find it and fix it (and self-report if needed) than the inspector or media find it.

• Train Your Team: Ensure whoever is handling payroll or HR knows the basics of the Fair Work Act, National Employment Standards, and the relevant awards for your staff. Even line managers should understand why, say, a casual gets 25% extra or why they can’t just give “time off later” instead of paying overtime without a proper agreement. When everyone understands the rules, mistakes are less likely.

• Keep Excellent Records: As emphasized, maintain thorough records and keep them organized. This not only keeps you compliant with record-keeping laws, but it makes it easier to track entitlements and respond to any queries. If an employee says “I think I wasn’t paid correctly on that public holiday last month,” you can readily pull timesheets and payroll records to verify.

• Seek Professional Help When Needed: If you’re not sure, ask. This could mean calling the Fair Work Ombudsman’s help line for general advice, consulting with an employment lawyer for complex situations, or engaging a payroll service or bookkeeper who’s experienced in awards. The cost of advice is tiny compared to the cost of getting it wrong (e.g. $50m penalty for Woolworths underpayments, which likely dwarfs what consulting an expert would have cost them early on).

• Implement Strong Payroll Controls: For example, have a second person review the pay run before wages are disbursed. Use checklists each pay cycle (did we pay all loadings? have all new hires provided TFN and super choice? etc.). If using timesheets, ensure they’re approved by managers for accuracy.

• Keep up with Wage Theft Legislation: States like Victoria and Queensland have criminalized deliberate underpayment (wage theft). Federally, there’s talk of strengthening laws too. This means mistakes could not only cost money but lead to criminal charges if prosecutors think it was deliberate. While genuine mistakes handled properly aren’t crimes, repeated “mistakes” might not get sympathy. So treat compliance seriously at the highest levels of your company.

By following these steps, you can greatly reduce the risk of payroll mistakes. It creates a culture of compliance and shows employees you value paying them correctly. And remember, Fair Work Ombudsman isn’t out to get those who are genuinely trying – if you discover an error and correct it (and maybe volunteer back-pay), they often won’t prosecute. The ones who get hit hard are those who ignored problems or were negligent.

In summary, payroll compliance is an ongoing process. But with the right systems and mindset, you can avoid the common traps we discussed. Your reward will be happy employees, no nasty surprises from inspectors, and the peace of mind that you’re doing the right thing by your team.

Need help ensuring your payroll is 100% compliant? WorkStem is here to help. Our Australia-specific payroll solution automatically updates with the latest award rates and tax rules, reducing the chance of human error. Plus, our experts can assist with compliance audits and setup. Book a consultation today to see how we can streamline your payroll and protect your business.

Frequently Asked Questions

Q: What is considered “wage theft” in Australia?
A: Wage theft generally means intentional underpayment of wages or entitlements. From 1 January 2025, intentional underpayment can be a federal criminal offence, including some super-related underpayments. Honest mistakes aren’t the target.

Q: How can I make sure I’m paying the correct award rates and penalties?
A: Confirm the correct award/EA, then use the Fair Work Pay and Conditions Tool (P.A.C.T.) and pay guides to check current minimum rates, penalties and allowances. Review rates after Annual Wage Review changes.

Q: Do I really need to keep timesheets for salaried employees?
A: Yes, especially for award-covered salaried staff and annualised wage arrangements. Employers must keep time and wages records for 7 years, and awards usually require annual reconciliations to ensure the salary covers award entitlements.

Q: What penalties can I face for payroll mistakes or underpayments?
A: You must back-pay underpayments. Civil penalties can be significant and depend on business size and whether the breach is “serious.” For non-small businesses, courts can impose up to $495,000 per contravention, or $4,950,000 for some serious contraventions, with underpayment cases potentially higher via 3× the underpayment rule.

Q: My business inadvertently underpaid staff what should I do?
A: Calculate the shortfall, fix the payroll settings, notify affected employees, and pay back promptly. Keep clear records and consider contacting the FWO if the issue is material or systemic. Prompt remediation helps separate mistakes from intentional conduct.