5 Warning Signs Your Payroll System Is Under-Paying Staff

In recent years, underpayment scandals have rocked every industry — retail, banking, education, health, hospitality, and even government. In 2024, National Australia Bank revealed a $130 million remediation bill after identifying systemic payroll underpayments across thousands of employees. Woolworths, Coles, and Qantas have faced similar headlines.

But what these stories reveal is not malice — it's complexity. Most Australian businesses don't intentionally under-pay their staff. They're tripped up by a tangled web of modern awards, outdated systems, and manual calculations that can't keep pace with constant legislative change.

The introduction of Wage-Theft laws (now criminal offences in QLD and VIC, and set to expand nationally under the Fair Work Amendment – Closing Loopholes Bill) has raised the stakes. Businesses can now face fines exceeding $7 million and directors can be held personally liable.

The Cost of Getting Payroll Wrong

How confident are you that your payroll is watertight? Here are five signs it's time for a serious payroll health check.

1. You're Still Using Spreadsheets or Manual Inputs

Every manual touchpoint introduces risk — formula errors, version confusion, or missed accruals. Spreadsheets might have worked when you had 20 staff, but at scale they become compliance time-bombs.

Best Practice: Move to a STP Phase 2-compliant payroll platform with automated validation, audit trails, and version control. Choose software that natively understands Australian awards rather than generic international systems that require complex customisation.

2. HR, Payroll, and Timekeeping Don't Integrate

Disconnected systems cause mismatched data: missing start dates, incorrect hours, or unprocessed terminations. A single missed integration field can result in months of underpayment.

Best Practice: Integrate your HRIS, payroll, and T&A systems through secure APIs. Payroll.Net provides out-of-the-box connectors with major platforms like Employment Hero, KeyPay, and Definitiv, ensuring one source of truth.

3. Employees Regularly Query Their Payslips

Persistent queries mean your people don't trust the process. The reputational risk of "I think I'm being under-paid" can ripple across social channels and affect your employer brand.

Best Practice: Implement employee self-service portals that display transparent pay breakdowns, super contributions, and leave accruals. Transparency breeds trust.

4. Your Award Library Hasn't Been Updated in 12 Months

The Fair Work Commission releases dozens of award amendments annually — from allowances and penalty rates to classifications. If your system hasn't been refreshed since last year, it's out of date.

Best Practice: Conduct quarterly audits of your award configuration. Payroll.Net clients receive automated updates aligned with award changes validated by certified payroll specialists.

5. Payroll Is Seen as an Admin Function, Not Governance

If payroll only surfaces during pay runs, you're missing its strategic value. It's a financial control system, not just an HR process.

Best Practice: Treat payroll as part of your governance framework. CFOs should review accuracy rates, audit logs, and compliance KPIs quarterly.

Taking Action: Your Next Steps

Underpayments rarely start with negligence — they start with neglect. The cure is visibility, automation, and governance. A managed payroll model gives you all three.

Don't wait for an audit or employee complaint to discover payroll issues. Take control now with a comprehensive payroll health check and ensure your systems are protecting both your staff and your business.