Payroll of today and into the future is about compliance, not just processing.

“The role continues to change, driven by the pressures of keeping pace with legislation. It is very much now about protecting the employer’s brand and reputation, supporting employee engagement and protecting directors’ liabilities.” Ross Heron, CEO, Australian Payroll Association

As outlined by Ross Heron in the APA 2026 Research, the key requirements and responsibilities of business are to be sure that the processing and auditing of payroll is undertaken in an organised and most efficient way.

Why Does Payroll need to change?

The Payroll Problem

“From 1 January 2025, intentional wage underpayment became a federal criminal offence under the Fair Work Act. The Fair Work Ombudsman recovered $358 million in back-payments from Australian employers in 2024-25 alone and more than $2 billion over the past five years.” Ross Heron, CEO, Australian Payroll Association

In addition to legislation passed in the Fair Work regulations and laws in the past 3 years, the Australian Government is reintroducing simplified processes for the hearing of wage underpayment claims as a feature of the Fair Work Ombudsman (FWO) activities that will streamline the investigation and prosecution processes.
A shortage of appropriately skilled payroll team leaders exists to take the lead in this transition from processing activities and data validation to managing and auditing payroll compliance at every pay run. We refer to the recent court ruling in the Coles case for the undertaking of the Better Off Overall test at every pay run for salaried employees

The term “Coles BOOT” refers to landmark legal and industrial cases involving the Better Off Overall Test (BOOT) and annualised salary compliance for Coles workers, notably Duncan Hart v Coles Supermarkets (2016) and subsequent Federal Court wage compliance rulings. https://hhr.com.au/the-new-pay-period-boot-what-the-landmark-ruling-means-for-employers/

This will require the undertaking of the BOOT every payrun without the ability for the annual offset providing of the process

The solution

Make the changes to lift the activities from a back-office processing role to leadership of the team’s responsibilities for overview of the outcomes.

Give the team members the tools that will reduce the need for their focus on processing activities of accurate data compilation from employees’ contract terms, and award rule application, even if not paid under an appropriate award, at least measured against them the BOOT.

“Poor or incomplete data entering payroll systems is the single largest operational risk in the 2026 survey, cited by 65.3% of respondents, nearly double the 32.7% recorded in 2025. This is not a payroll team problem. It is an upstream data governance failure. And with intentional wage underpayment now a criminal offence, that upstream risk carries direct legal consequences.” Ross Heron, CEO, Australian Payroll Association

Reduce the need for multi-system data compilation to an all-in-one, single-point data and process-flowing system from the employee contracted default pay classification, variable as needed to suit the roles undertaken each shift and pay period, and with automated payroll and leave accumulation processing.    

Reference from a business that made the change 

“ Here we are now with, not only a better overall Inzenius system that is now delivering up to a 70% reduction in data duplication and entry across a number of systems in payroll processing time and effort, we have achieved additional improved functionality overall.” Grant Summers, CFO, Incognitus 

The APA Article Extracts Supporting the Need for Change in Payroll

https://austpayroll.com.au/news-and-resources/the-state-of-payroll-leadership-in-australia?utm/ 

JULY 2026 | Payroll Leadership Series 
By Ross Heron, CEO, Australian Payroll Association

Every year, Australia’s payroll professionals process more than $1.2 trillion in wages and salaries for around 14.7 million workers, withhold close to $300 billion in PAYG tax for the ATO and direct about $144 billion in employer superannuation into retirement savings.

Every year, Australia’s payroll professionals process more than $1.2 trillion in wages and salaries for around 14.7 million workers, withhold close to $300 billion in PAYG tax for the ATO and direct about $144 billion in employer superannuation into retirement savings. 

That is not administration. That is the mechanism through which Australians are paid, the government is funded and the retirement system is built, run largely by professionals who rarely get credit for any of it. 

Sources: ABS Monthly Employee Earnings Indicator; Final Budget Outcome 2024-25, Table 1.3 (PAYG withholding $295.8 billion); APRA Quarterly Superannuation Performance Statistics, December 2024 (employer contributions $144 billion). 

We wanted to understand what it really feels like to lead that function in Australia right now. So we sat down with 20 senior payroll leaders across sectors from healthcare and mining to local government and financial services, from organisations with 400 to 40,000 employees. We asked the same six questions. We did not script the answers. What came back was candid, sometimes surprising and consistently important. 

The 2026 Australian Payroll Industry Report gives those conversations statistical weight, drawing on more than 1,200 payroll, HR and finance professionals across Australia. Together they tell one story: a profession under pressure, rising to meet it. 

Six questions guided every conversation: how the role has changed; compliance and governance; complexity and risk; the future of real-time compliance; AI adoption; and the technology landscape. 

1.  From back office toward the boardroom

The single most consistent theme across every conversation was the changing status of payroll. But this is not a uniform story of triumphant elevation. It is a profession in genuine transition: some leaders already operate at the highest levels of their organisations while others still fight for the most basic recognition.

The external environment is providing clear momentum for those conversations. From 1 January 2025, intentional wage underpayment became a federal criminal offence under the Fair Work Act. The Fair Work Ombudsman recovered $358 million in back-payments from Australian employers in 2024-25 alone and more than $2 billion over the past five years. For payroll leaders who have been making the case for investment and recognition, the legislative environment has handed them the strongest business case they have ever had. 

The 2026 Payroll Industry Report confirms this shift in financial terms. 

Group Payroll Managers earn a median of $193,200, with top quartile earners reaching $215,876. Payroll Managers sit at $151,100. These are not the salary figures of an administrative function. They reflect a market that has concluded, in financial terms at least, that payroll leadership cannot be left to chance. One leader raised a related challenge: too many organisations still price payroll roles on headcount rather than payroll complexity. A manager running fourteen enterprise agreements for 800 employees may be paid the same as one managing a single EBA for 5,000, despite carrying significantly more risk. Until the market prices complexity, the salary data will continue to understate the value of genuine specialist expertise. 

The survey nonetheless reinforces the uneven picture described by leaders themselves. A persistent 15.9% of executives never request payroll analytics, mirroring the 2025 finding and suggesting no improvement year on year. 

2.  Compliance and Governance: Maturing fast, but not fast enough

That level of maturity is real and growing, but it remains the exception, not the norm. Many leaders are still making the case for basic investment. 

The survey quantifies the gap precisely. Only 36.4% of organisations track payroll KPIs regularly, meaning nearly two-thirds have no consistent visibility over their own payroll performance. Almost half of executives (45%) request payroll analytics monthly, which is encouraging. But 15.9% never do, and in an environment where intentional underpayment is now a criminal offence, that is a governance blind spot organisations cannot afford. 

The most mature organisations have moved beyond compliance as a periodic event. Monthly compliance forums, proactive industrial instrument reviews, internal risk updates shared across the business and board level reporting are becoming the hallmarks of leading payroll functions. One leader described a team of five dedicated wage compliance officers whose sole focus is timesheet management, approval training and ongoing compliance education across the whole business. 

Not everyone described their compliance environment in the same terms. One leader’s assessment was starker. Their compliance framework, they said, is at breaking point. Executives have a heightened interest in payroll compliance but do not truly understand what they are looking at when they look inside the payroll operation. Their fear: that something might genuinely need to break before the organisation approves the investment.

Another leader offered a different structural answer to the same problem. In their view, compliance and governance should not be managed by the payroll team at all. They should sit in a completely separate function, one focused entirely on reviewing and auditing payroll outputs, with no operational processing responsibilities. That separation, they argued, is what genuine governance actually looks like. 

3.  Managing Complexity and Risk: Data, systems and the human factor 

When asked about the biggest risks they manage, leaders consistently converged on three areas. The 2026 survey data gives each of them statistical weight. 

Systems and integration.  Poor integration between systems and payroll technology tied as the top two operational challenges in the survey, each selected by approximately 45% of respondents. The frustration is not about complexity. It is about fitness for purpose. 

“What keeps me up at night is the sheer number of payroll systems in Australia that are not fit for purpose and were clearly not built by people who have actually processed payroll. When something goes wrong, the implementation consultant often does not know enough to fix it.”Payroll leaders response 

Data quality.  Poor or incomplete data entering payroll systems is the single largest operational risk in the 2026 survey, cited by 65.3% of respondents, nearly double the 32.7% recorded in 2025. This is not a payroll team problem. It is an upstream data governance failure. And with intentional wage underpayment now a criminal offence, that upstream risk carries direct legal consequences. 

Human behaviour.  Several leaders highlighted the compliance risk created by managers and employees who do not treat payroll processes as part of their job: late timesheets, unapproved leave, incorrect self-service entries. One leader runs a dedicated compliance team whose entire focus is behaviour change, not system fixes. The risk sits with every manager who approves a shift without checking the entitlement. Every single one. 

Several leaders named a risk that sits outside the usual systems and data conversation: the talent pipeline itself. One leader described a market that has shifted toward candidates who want to do less and get paid more, making it genuinely difficult to secure people with the right skills, capability and mindset for increasingly complex roles. Another observed the same dynamic from a different angle: entry-level payroll salaries have spiked sharply, but the skills on offer have not kept pace, creating a mismatch that puts pressure on teams trying to build strong payroll functions from the ground up. 

One leader named a specific failure in the technology market. Having recently gone through a full procurement process, they came away genuinely disappointed. Software vendors, they noted, are increasingly stepping back from implementing their own technology, instead relying on system implementation specialists who often lack deep payroll knowledge. The result is implementations that create more problems than they solve. Their view: the risk associated with changing payroll systems is now so high that many organisations are choosing to stay on inadequate platforms rather than face the disruption of replacing them. 

4.  Real-Time Compliance: Embedding intelligence, not adding layers 

No topic produced more pointed disagreement than real-time compliance. 

Two sharply different positions. One argues these tools are essential and the market has been too slow to adopt them. The other dismisses the real-time concept entirely, arguing that a well configured system and rigorous twice-yearly audits deliver compliance without the cost and complexity. Between them sits a third view. 

One leader supports the principle of compliance technology but argues the framing matters: rather than genuinely real-time monitoring running in parallel with live payroll, what the profession actually needs is rigorous, systematic assurance built into a post-payroll review cadence. Done thoroughly and consistently, they argued, that delivers the same outcome without the complexity and cost of a truly real-time parallel system. The human factor, in their view, will always be needed to interpret outputs. No technology changes that. 

The debate is no longer hypothetical. One leader in this series had recently completed a procurement process for a compliance tool and was about to implement it. The tool will run post payroll, functioning as a wage assurance mechanism, automating processes and checks that their team currently completes manually every fortnight. The framing is telling: not real-time in the vendor sense, but systematic, automated assurance built into the regular payroll cycle. Theory becoming practice, one implementation at a time. 

Three positions, three different starting points, but a consistent conclusion running beneath all of them: passive compliance is no longer an option in Australia. Whether an organisation invests in real-time monitoring, builds a rigorous audit cadence, or approaches assurance through a post-payroll review model, the direction of travel is the same. The best long-term answer is not a separate compliance overlay bolted onto an existing system. It is compliance intelligence embedded directly within core payroll technology built in from the ground up, active at every step of the payroll cycle and requiring no parallel system to run alongside it. 

5.  AI and Payroll: The gap between the leaders and the rest is widening 

Only 12.9% of payroll teams currently use AI tools operationally. That single number frames everything else in this section. The conversations behind it revealed exactly why the gap is so wide. 

6.  The Technology Landscape: Solid but rarely exciting 

Across twenty conversations, the composite response was: not much. “True innovation is really low.” “Nothing that jumps out.” “It is pretty dull.” “The sales pitch is all compliance, but nothing connects all the dots.” These are the words of experienced practitioners who know exactly what good looks like. 

The survey validates the frustration. While 48.2% of payroll professionals describe themselves as satisfied or very satisfied with their technology, 26.2% are unsatisfied or very unsatisfied. In Time and Attendance and award interpretation, one of the highest-risk areas in Australian payroll, the largest single group (42.6%) are neutral. Their tools work. But could they be doing so much more? 

The most consistent wish across every conversation was not simply a better payroll system. It was something more fundamental: a central workforce management control platform that genuinely connects payroll, HR, time and attendance, workforce management and finance in a single environment. A platform that gives payroll professionals the ability to proactively manage every aspect of the workforce: to surface compliance risks before they become underpayments, to model award interpretation against real rostering decisions and to assure wage accuracy continuously rather than reactively. Not a system that is integrated on paper and disconnected in practice. Actually unified. Actually intelligent. 

“There is nothing out there that connects all the dots. One dashboard driving HR, payroll, workforce management and finance. That is what we actually need. What we get instead is systems that are integrated on paper and disconnected in practice.” Head of Payroll · Large enterprise, financial services sector 

There were genuine points of optimism. Several leaders described tools beginning to approach this vision: platforms surfacing actionable insights across finance, workforce and payroll data; intelligent shift bidding that factors in award obligations before a roster is published; compliance flags triggered at the point of scheduling rather than after payroll is run. These are early signals that the market is moving. The appetite is not theoretical. It is urgent, specific and unsatisfied. The profession knows exactly what it needs. It is waiting for the market to catch up. 

7.  The Payroll Function of the Future: What comes next 

Across every conversation, we asked leaders to look forward. How do they see payroll evolving in the next two to three years? The answers were consistent: not in the details, but in the direction of travel. 

Tomorrow’s payroll function will not be defined by what it processes. It will be defined by what it governs: workforce compliance, payment accuracy and employee experience, operating as a control function across the entire organisation. Increasingly, payroll professionals are finding themselves in the role of bridge builder: between finance and HR, between management and employees, between an organisation’s operational reality and its strategic ambitions. The skill set required will be genuinely cross-functional, with strong connections to HR, Finance, Legal, Risk and Compliance and the authority to match. 

One dimension of this shift that came through strongly and that connects payroll directly to conversations boards are already having, is employee experience. Payroll accuracy has always mattered. But leaders increasingly described it as a driver of trust and engagement, not just a compliance obligation. Employees who are paid incorrectly do not just raise a query: they disengage. They lose confidence in the organisation. They leave. Payroll, seen through this lens, is not the back office. It is the moment of truth in the employment relationship, repeated every fortnight for every person in the organisation. 

That evolution demands skills that most payroll teams are still building. The ability to interpret legislation is table stakes. What leaders described needing, and struggling to find, is the combination of technical depth and business fluency: payroll professionals who can read a general ledger, chair a risk committee, present to a board, manage an enterprise agreement and architect a technology solution, sometimes in the same week. 

The talent challenge sits directly in the path of this evolution. Several leaders described a market that is not producing enough people with the right capability at the right career stages. Entry-level salaries have moved sharply upward without a commensurate lift in skills. Senior talent is scarce and expensive. Cybersecurity is an emerging requirement: data protection and IT coordination are now payroll responsibilities in ways few anticipated five years ago. And the profession, for all its growing complexity, still lacks the formal recognition as a standalone discipline separate from HR and Finance, recognition that would help attract and retain the calibre of people it now needs. 

Technology, specifically the singular control platform described across every conversation, will be the infrastructure this function runs on. The leaders who are getting ahead are not waiting for it to arrive. They are building the foundations now: investing in AI literacy, automating exception management, generating board-level reporting through AI tools and repositioning their teams as strategic advisors rather than transactional processors. They are, in effect, building the future payroll function manually while the technology market catches up. 

The profession is ready for what comes next. It knows what it needs, what it is worth and where it is heading. The question is whether the organisations it serves and the vendors it relies on are ready to meet it there. 

Leadership Priorities:

What the Best Are Doing Differently 

The leaders in this series who have made the greatest progress share five habits in common. 

Reframe the Function

Improve Data Quality

Build Governance Framework 

Closing Thoughts 

We asked every leader the same closing question: how are you feeling about the profession right now? 

Several described genuine excitement about the strategic opportunity payroll now has. A few described real exhaustion: the weight of managing more with the same or fewer resources, of building business cases that should not need to be made, of carrying compliance risk that the rest of the organisation does not fully understand. 

And beneath all of the progress sits a concern that did not make it into boardroom presentations but came through clearly in the interviews: payroll professionals in Australia are burning out. The pace of legislative change, the pressure of compliance risk and the persistent feeling of being undervalued are taking a toll. Several leaders described the emotional weight of a role that carries enormous consequence but rarely receives commensurate recognition. 

Remember the number this article opened with: $1.2 trillion in wages, processed every year by people like the twenty leaders in these pages. That scale was never the point. The point is that every dollar of it depends on someone getting it right. That is the case for this profession. It should not need to be made twice.