< img src ="https://assets.techrepublic.com/uploads/2025/01/tr_20250110-new-payroll-compliance-penalties-tech-adoption-australia.jpg" alt="" > A new study by payroll tech company Yellow Canary found that just 22% of Australian services have embraced proactive payroll compliance technology. Still, more might follow as they look for to decrease the legal and service threat of underpaying employees.
Intentional employee underpayments were made a criminal offense on Jan. 5 following modifications to Australia’s Fair Work legislation, with people and organizations now potentially liable. While unintentional errors will not attract criminal charges, Yellow Canary estimates underpayments represent between 1% and 3% of overall headcount costs across the market.
The Yellow Canary study of 533 compliance leaders in Australia discovered the increasing danger around underpayments is driving more tech buyers towards proactive payroll compliance tools:
- 23% plan to adopt technologies in the next one to 2 years.
- 21% of companies plan to carry out these tools in the next 12 months.
- 17% said they were satisfied with manual compliance procedures.
- 15% were curious about more proactive payroll innovations however had no strategies to implement them.
“The intro of the Closing Loopholes Acts, consisting of the criminalisation of wage theft, marks a turning point for Australian companies,” Yellow Canary Managing Director Marcus Zeltzer stated in the report.
“Our research study reveals while many organizations are making payroll compliance a leading concern, a considerable number are still counting on flawed manual procedures or have actually not performed comprehensive reviews.”
SEE: Best practices for preserving payroll compliance
Payroll teams are concerned they are not paying staff correctly
Almost half (48%) of those surveyed by research home Lonegran Research on behalf of Yellow Canary stated they had been making payroll compliance a leading concern ahead of the Closing Loopholes law.
Nevertheless, 93% of local organizations with a minimum of 50 workers still stated they had at least one location of issue regarding prospective employee underpayments in their organisation as the law came into force. Furthermore, 17% expressed basic unpredictability about whether they were paying their staff correctly, while 19% believe a real underpayment concern might exist however have actually not verified it.
A number of key motorists of payroll underpayment issues were determined in the research report:
- 39% of participants had worry about staying present with legislation and obligations, showing the intricacy of remaining certified in a developing regulatory environment.
- 37% mentioned issues around a lack of internal communication, noting that collaboration and details circulation across departments reduce errors and inconsistencies in payroll processes.
An additional 32% had interest in time and resource constraints for payroll audits and historical reviews. On the other hand, the dependability of payroll software application in ensuring compliance was an issue for 31%, as was aligning rostering or time and presence processes, which are typically managed through system combinations.
SEE: 8 best payroll software application for Australian Businesses
Just 7% of participants said there are no areas of concern regarding possible underpayments. Nevertheless, Yellow Canary said it was uncertain if this shown real assurance or lack of awareness, offered it had actually discovered some non-compliance in 100% of clients in its work reviewing $70 billion in salaries.
More Australia protection
Proactive compliance and AI might improve payroll scorecard
Australia has experienced widespread problems with underpayments– affecting big personal and public sector organisations– in many cases due to Australia’s complex system of payment awards.
The Yellow Canary report discovered lots of employers still count on “less dependable” techniques:
- 31% still conduct manual audits with spreadsheets.
- 32% evaluation pay code configurations.
- 37% use tasting for payroll checks.
SEE: A step-by-step guide to doing payroll (the right way)
“While companies may feel confident in their manual approaches, these procedures are flawed, vulnerable to mistake, limited in scalability, and unable to keep up with the increasing intricacy of compliance,” the report stated.
Adopting proactive payroll compliance technologies is expected to help in reducing the problem by changing more manual evaluation procedures with routine tech-supported audits of workforce payroll data.
The incorporation of AI might support these efforts– however some services stay skeptical
More than half (59%) of Australian organizations with 50 or more staff members are positive about the capacity of presenting expert system into their payroll compliance frameworks in the future.
AI is not yet frequently used in payroll compliance in Australia, however the report stated that the development of technology shows “terrific capacity for being incorporated into existing processes.”
For example, AI can be utilized to evaluate payroll data patterns, and determine anomalies– such as incorrect pay codes, underpaid employees, or misclassifications– to offer payroll teams with real-time insights.
Nevertheless, 27% of participants stay either skeptical of AI’s capability to improve payroll compliance or think AI will introduce more obstacles and complicate payroll procedures in the future.
“Businesses should browse obstacles such as integration issues, information privacy issues, and resistance to change before extensive adoption [of AI],” the report stated.