Why Payroll Compliance Matters: Lessons for SMEs from Australia’s Biggest Employers

Getting payroll right sounds simple, but recent headlines prove otherwise. National Australia Bank (NAB) has just flagged a $130 million cost in FY2025 after underpaying its staff. This isn’t the first time, either, NAB has spent close to $400 million over the past five years fixing payroll mistakes.

And NAB isn’t alone. In recent years, some of Australia’s largest employers have faced massive underpayment scandals:

• Woolworths admitted in 2019 it had underpaid staff by over $300 million, sparking national outrage.
• Qantas confirmed in 2020 that it underpaid workers by millions, damaging trust with its workforce.
• Even universities and retail chains have been caught out by complex Awards and misclassification issues.

If billion-dollar companies with entire payroll teams and sophisticated systems can get it wrong, what chance do small and medium businesses have without expert help?

Why payroll mistakes happen

Payroll errors in Australia usually stem from:

• Complex Modern Awards and Enterprise Agreements – each with different allowances, penalty rates and conditions.
• Changing Fair Work rules – including annualised wage arrangements, overtime, and record-keeping obligations.
• Poor systems and manual processes – spreadsheets and outdated software leave room for human error.
• Underestimating compliance – thinking payroll is just about pressing “pay” each fortnight, when in reality it’s tied to strict legislation under the Fair Work Act.

For SMEs, even a small mistake can snowball into:

• Owing backpay to staff (sometimes years’ worth).
• Penalties and audits from the Fair Work Ombudsman.
• Reputational damage at a time when attracting and retaining staff is already tough.

Imagine this for your business

If multinational banks, airlines and retailers with entire HR departments can’t keep up with compliance, how can small and medium businesses be expected to get it right on their own?

The reality is that wage compliance isn’t just a “big business” problem — it affects SMEs just as much, if not more, because smaller businesses often don’t have the resources or specialist knowledge to manage the complexity of the system.

How HR Excellence Partners can help

At HR Excellence Partners, we specialise in helping SMEs cut through the complexity of payroll compliance. We work with small to medium employers every day to:

• Review payroll systems for compliance against relevant Modern Awards (such as the Clerks Award, Retail Award, or Professional Employees Award).
• Audit pay practices to identify and fix risks before they become expensive problems.
• Provide ongoing HR and payroll compliance support tailored to your business.
• Help you meet your obligations under the Fair Work Act and avoid falling into the trap of unintentional underpayment.

We know SMEs don’t have the luxury of multimillion-dollar remediation budgets. That’s why we provide practical, affordable support to make sure you’re paying your people correctly, every time.

The takeaway

Payroll compliance is one of the most complex parts of running a business in Australia, and even the biggest companies get it wrong. For SMEs, the risk is just as real but with the right support, it doesn’t have to be overwhelming.

If you want confidence that your payroll is compliant with Fair Work requirements, talk to HR Excellence Partners today.