Payroll Compliance Checklist Australia: What Employers Must Get Right

What Payroll Compliance Actually Covers

In Australia, payroll compliance spans at least three separate regulatory relationships, each with its own rules and its own regulator. Pay rates, classifications and the National Employment Standards sit under the Fair Work Act 2009 and are enforced by the Fair Work Ombudsman. Superannuation guarantee obligations sit under the Superannuation Guarantee (Administration) Act 1992 and are administered by the ATO. Pay event reporting sits under the ATO's Single Touch Payroll framework. A business can be doing well on one of these and still be exposed on another, which is why a single "payroll is fine" assumption rarely holds up to a proper review.

The Fair Work Ombudsman's own enforcement activity shows the scale of the problem: its 2024-25 annual report recorded a record $23.7 million in court-ordered penalties and continued recoveries of unpaid wages running into the hundreds of millions of dollars across recent years. Most of that activity traces back to a small, repeatable set of failure points, which is what this checklist is built around.

Award Classification and Pay Rates

Getting an employee's classification wrong under a modern award or enterprise agreement is the single most common source of underpayment, because every downstream calculation, base rate, penalty rates, overtime, allowances and leave loading, depends on it being right in the first place. This is a particular risk for NDIS and allied health employers running the SCHADS Award, where classification levels within Schedule B are based on the actual duties and qualifications of the role rather than a job title, and are easy to misapply when a support worker's duties expand over time without the classification being reassessed.

Award pay rates are also varied by the Fair Work Commission in most cases from the first full pay period on or after 1 July each year, following its annual wage review. A rate that was correct in June can be underpaying by July if the update isn't applied, and this is one of the most common gaps found in a payroll review because it requires an active step rather than something payroll software updates on its own.

Superannuation and Payday Super

The Superannuation Guarantee rate reached 12% from 1 July 2025 under the legislated schedule in the Superannuation Guarantee (Administration) Act 1992, and stays at 12% for the 2026-27 financial year. Missing a super payment, or getting the ordinary time earnings calculation wrong, triggers the ATO's Superannuation Guarantee Charge, which is not tax deductible and includes interest and an administration fee on top of the shortfall itself.

The bigger structural change is Payday Super, which starts from 1 July 2026 and requires super to be paid in line with each pay run instead of quarterly. That shrinks the window for catching a misconfigured pay item or an outdated fund detail before it compounds across dozens of pay cycles a year instead of four. We've covered exactly what this means for a Xero-based payroll in a dedicated article on Xero Payday Super setup if your business runs Xero specifically.

STP Phase 2 Reporting and Record Keeping

Single Touch Payroll Phase 2 requires far more detail to be reported with every pay event than the original STP standard, including disaggregated gross pay components, an income type for every payment, and a cessation reason whenever an employee's employment ends. Because these reports go to the ATO in real time, a mapping error shows up in year-to-date figures immediately rather than staying hidden until a quarterly lodgement. We've broken down what STP Phase 2 actually requires, and the setup mistakes that trip up SCHADS Award payrolls specifically, in our STP Phase 2 guide.

Separately, the Fair Work Regulations 2009 require employers to keep time and wages records for at least seven years, covering pay rates, hours worked, leave taken and superannuation contributions, and to issue a payslip within one working day of paying an employee, with specific content requirements set out in regulation 3.46. Missing or incomplete records don't just risk a Fair Work Ombudsman finding, they also make it far harder to defend a pay rate or classification decision if it's ever challenged, since the burden can shift to the employer where records are inadequate.

Wage Theft and Underpayment Risk

Since 1 January 2025, under changes made by the Fair Work Legislation Amendment (Closing Loopholes) Act 2024, intentionally underpaying an employee's wages, superannuation, leave entitlements, overtime, penalty rates, allowances or leave loading is a criminal offence under the Fair Work Act, not just a civil matter. Penalties for an individual can reach 10 years' imprisonment and fines of up to 1,000 penalty units, with fines of up to 5,000 penalty units for a body corporate. The Fair Work Ombudsman has also stated it will continue to refer serious and deliberate underpayment cases for criminal prosecution rather than treating every case as a civil compliance matter.

This changes the calculus for a payroll compliance checklist considerably. An honest mistake in a pay category or an outdated award rate is still a civil underpayment risk and needs fixing, but the criminal threshold specifically targets underpayment that's intentional, which is exactly why documented, regularly reviewed processes, rather than a "set and forget" payroll configuration, matter more than they used to.

The Full Payroll Compliance Checklist

Running through this list once is useful. Running through it as a standing part of your payroll process, particularly if you're on the SCHADS Award or employ a mix of casual, part-time and contracted staff common in NDIS, medical and allied health businesses, is what actually keeps a business compliant as award rates, super rules and reporting requirements continue to change.