A new survey by payroll tech firm Yellow Canary found that just 22% of Australian businesses have adopted proactive payroll compliance technology. Still, more may follow as they seek to reduce the legal and business risk of underpaying employees.
Intentional employee underpayments were made a criminal offense on Jan. 5 following amendments to Australia’s Fair Work legislation, with individuals and businesses now potentially liable. While unintentional mistakes will not attract criminal penalties, Yellow Canary estimates underpayments represent between 1% and 3% of total headcount costs across the market.
The Yellow Canary survey of 533 compliance leaders in Australia found the rising risk around underpayments is driving more tech buyers toward proactive payroll compliance tools:
- 23% plan to adopt technologies in the next one to two years.
- 21% of businesses plan to implement these tools in the next 12 months.
- 17% said they were satisfied with manual compliance processes.
- 15% were curious about more proactive payroll technologies but had no plans to implement them.
“The introduction of the Closing Loopholes Acts, including the criminalisation of wage theft, marks a pivotal moment for Australian businesses,” Yellow Canary Managing Director Marcus Zeltzer said in the report.
“Our research reveals while many businesses are making payroll compliance a top priority, a significant number are still relying on flawed manual processes or have not conducted thorough reviews.”
SEE: Best practices for maintaining payroll compliance
Payroll teams are concerned they are not paying staff correctly
Almost half (48%) of those surveyed by research house Lonegran Research on behalf of Yellow Canary said they had been making payroll compliance a top priority ahead of the Closing Loopholes law.
However, 93% of local businesses with at least 50 employees still said they had at least one area of concern regarding potential employee underpayments in their organisation as the law came into force. Additionally, 17% expressed uncertainty about paying their staff correctly, while 19% suspect an underpayment issue may exist but have not confirmed it.
Several key drivers of payroll underpayment concerns were identified in the research report:
- 39% of respondents had concerns with staying current with legislation and obligations, demonstrating the complexity of remaining compliant in an evolving regulatory environment.
- 37% cited concerns around a lack of internal communication, noting that collaboration and information flow across departments reduce errors and inconsistencies in payroll processes.
A further 32% had concerns with time and resource constraints for payroll audits and historical reviews. Meanwhile, the reliability of payroll software in ensuring compliance was a concern for 31%, as was aligning rostering or ti