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With underpayment issues in the spotlight and Australia’s new wage theft laws taking effect on January 1, organisations entered 2025 under ongoing—and rightful—pressure to fulfil a fundamental obligation: paying employees correctly.
Our 2025 State of Payroll Compliance report captures insights from 533 compliance leaders, highlighting employers' top concerns—especially underpayments and the impact of new wage theft laws under the Closing Loopholes Acts.
In this blog we explore key findings and actionable steps businesses can take to address them.
Top concerns for underpayment
- Evolving legislation and obligations (39%)
Frequent updates to wage laws, award conditions, and compliance requirements can be challenging for employers to track and implement accurately, often requiring time-intensive reviews of payroll systems, employee classifications, and entitlements.
To better manage this operational burden, organisations should leverage technology to automate payroll audits and consult legal counsel or payroll compliance experts to ensure proper interpretation and implementation of legislative changes.
- Lack of communication between departments (37%)
Payroll compliance isn’t just a payroll issue—it’s a people issue. Effective payroll compliance requires cross-functional collaboration, with the Board of directors playing a key role in fostering a culture of compliance.
To address this, leaders should establish clear communication channels and workflows to align departments such as HR, finance, and operations on compliance priorities and accountability.
- Time and resource constraints for payroll audits (32%)
While organisations recognise the value of regular payroll audits, they often find them costly in time and resources.
Organisations can streamline this process by automating tasks, centralising data across departments, prioritising high-risk areas, and engaging external experts to ensure compliance without overburdening internal teams.
Top concerns under the new wage theft laws
- Personal liabilities and financial impact (42%)
Personal liabilities for directors and senior management, along with the financial impact of wage theft claims, have become critical concerns under the new laws.
To manage these risks and show genuine commitment, organisations should make payroll compliance a priority in key meetings, ask management the right questions—especially about accuracy—and foster a strong compliance culture across the organisation.
- Increased administrative burden (40%)
The Closing Loopholes Acts have introduced additional complexity to payroll operations, increasing administrative burdens.
Organisations can address this by automating payroll processes, using integrated systems to reduce manual data entry, and delegating responsibilities across departments to manage compliance efficiently.
- Brand damage risks (35%)
With growing awareness and legal action on wage theft, organisations fear lasting damage to their reputation if they underpay employees.
To mitigate these risks, organisations should prioritise transparent communication and reporting with employees or stakeholders and act swiftly to resolve any payroll errors or complaints to maintain trust and protect their reputation.
Small incremental steps to address top concerns
The findings from our 2025 State of Payroll Compliance report highlight significant concerns around underpayment and the new wage theft laws. However, they also present organisations with an opportunity to enhance their payroll practices and strengthen their compliance frameworks.
Although the actions in addressing the concerns outlined above may take time, small, incremental improvements will help organisations shift from a reactive to a proactive approach to payroll compliance, alleviating concerns and ensuring they remain prepared for future changes.
