By Ross Heron | CEO, Australian Payroll Association
When Australia criminalised intentional wage underpayment on 1 January 2025, the reform was described as a watershed moment in workplace regulation. For the first time, deliberate underpayment became a criminal offence carrying severe financial penalties and potential imprisonment.
Fifteen months on, the practical question for Payroll Leaders is not whether the law exists but whether it has fundamentally changed the payroll landscape.
From Processing Function to Enterprise Risk
The most significant shift has not occurred in courtrooms, but in Australian boardrooms.
While investigations have commenced under the new criminal provisions, there has been no wave of headline prosecutions. That is unsurprising. Establishing intent beyond reasonable doubt sets a high evidentiary threshold.
Yet the absence of prosecutions should not be mistaken for limited impact.
Payroll is now firmly recognised as a core enterprise risk function. Wage compliance risk now sits alongside cyber security, workplace health and safety, and financial reporting integrity as a standing board-level concern. Boards are asking more sophisticated questions not just about whether payroll is accurate, but whether that accuracy can be independently assured and defended.
Governance Has Become Central
Since the reforms commenced, many organisations have undertaken comprehensive payroll reviews, including:
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Award and enterprise agreement interpretation audits
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System configuration and automation testing
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Backpay remediation programs
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Strengthened documentation of pay decision frameworks
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Introducing payroll compliance policies
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Formalised internal escalation and review processes
The criminal provisions have sharpened the distinction between error and intent. Historically, most underpayments have stemmed from complexity, modern awards, allowances and enterprise arrangements remain challenging to operationalise.
However, the regulatory lens has shifted. The key question is no longer simply “Was there an underpayment?” but rather:
“What evidence exists that the organisation took proactive, reasonable steps to prevent it?”
This shift has elevated the importance of documentation, internal controls, and governance maturity. For Payroll Leaders, defensibility now sits alongside technical precision.
Personal and Professional Accountability
The reforms have also heightened expectations around accountability. Although the offence targets intentional conduct by employers, decision makers and executives cannot ignore the broader implications.
Clear governance structures, defined responsibilities between payroll, HR and finance, and transparent reporting mechanisms are no longer optional safeguards, they are essential protections.
Payroll Leaders are increasingly viewed as custodians of organisational integrity, not merely managers of administrative pay cycles.
A New Standard for 2026
The next phase of this transformation is already emerging. Across Australia, Payroll Leaders are being asked not only whether payroll is accurate but whether that accuracy can be demonstrated, defended and independently validated.
The defining payroll trend in 2026 will be an uncompromising demand for clear, defensible evidence of accuracy. Accuracy that safeguards trust, protects enterprise value, and gives boards and regulators absolute payroll confidence.
Fifteen months on, the legacy of the criminal underpayment reforms may not be measured in prosecutions. Instead, it is reflected in a quiet but decisive transformation. Payroll has evolved into one of the most strategically significant assurance functions within Australian organisations.
For Payroll Leaders, the standard has shifted.
