Blog Post
March 31, 2023

Retailers should be aware of these eight payroll compliance pitfalls

Frequent changes to payroll, tax, and labour laws can make it difficult for employers to manage payroll requirements and maintain a consistent employee pay experience. Here are several common payroll issues retailers should be aware of.


One in three Australian organisations admit to making employee payment mistakes every pay run, and the CEO and CFO may never hear about them. The complexities of payroll – particularly in the often-volatile retail industry with seasonal, part-time, and full-time workers – are significant. Administrators must keep on top of legal and practical changes to remain compliant. These complexities have only been exacerbated due to the ever-changing retail landscape.

Taxes must be deducted appropriately and paid on time, wages must be computed properly, and records must be kept for each employee. This is all the more complicated now due to unpredictable economic circumstances and a growing focus on organisational risk. Failing to do so could lead to serious financial penalties.

And it’s not just employers feeling the pressure. According to the Australian Financial Review 31% of Australians said they have difficulty paying for essential goods and services. Additionally, “about half of self-employed workers, people on contracts, or casual employees are financially stressed, compared to 20 percent of people on ongoing contracts.” Paying employees on time and accurately has perhaps never been more important.

Given that the retail sector is heavily reliant on a casual workforce, pay accuracy is essential for the well-being of Australians. Retail businesses are at risk if the workforce is paid late or incorrectly. Associates can become disengaged or form a negative perception of the organisation. Employers could also face fines, penalties, or other repercussions.

Here are eight more payroll pitfalls for retailers to avoid.

1. Failing to pay for overtime hours

The Fair Work Act 2009 establishes that overtime is performed when an employee works beyond their ordinary hours of work, outside the agreed number of hours, and/or outside the span of ordinary hours. For many employers, an applicable award, enterprise agreement, or other registered agreement will establish additional overtime rates and considerations. Employers need to correctly pay their staff when overtime occurs, whilst ensuring all requirements of the applicable laws, awards, and agreements are adhered to. Inaccurate overtime tracking, rate determination, and calculations may lead to employee complaints, the consequences of which can be severe.

2. Violating minimum wage laws

Employers must pay covered employees at least the applicable minimum wage, regardless of how they are paid (for example, hourly, salary, commission, tipped, etc). And, in addition to keeping up with varying minimum wage requirements across jurisdictions, retail employers must also consider whether an award, enterprise agreement, or other registered agreement provides for higher wage standards. Australian employers – especially those that operate in more than one jurisdiction and industry – must consistently review their pay policies to ensure they follow the complex web of minimum wage laws that may apply to them.

Leveraging a trusted payroll provider and ensuring accurate workforce management data is critical for employers to comply with minimum wage laws' complex requirements.

3. Misclassifying employees

Worker misclassification is one of the most frequent pitfalls for employers across the globe, and this is no different in Australia. Many mandatory workplace pay and tax requirements rely on the accuracy of worker classification. To ensure all workers are properly accounted for in terms of taxes and pay conditions, they must be classified correctly, in line with their individual working conditions. This can be especially challenging for retailers, since seasonal demands may require rapid onboarding of new staff. Getting employees’ details correct in the early onboarding stages is critical. This helps prevent incorrect pay and manual data corrections whilst ensuring a positive new-starter experience.

4. Withholding violations

The Australian Taxation Office establishes several PAYG—pay as you go—withholding obligations for which taxes must be withheld from employee wages. Employers must leverage a comprehensive payroll solution to reduce manual error and help ensure compliance with PAYG requirements.

5. Violating equal pay laws

It’s critical that employers take proactive steps to help eliminate pay disparity and ensure equal pay for equal work.

The Australian government is committed to strengthening workplace gender equality, including recent changes to the Workplace Gender Equality Act, that have now increased  transparency by mandating that the Workplace Gender Equality Agency (WGEA) publish employer-level gender pay gap reports. Employers should continue to monitor their progress and move towards a state that achieves gender pay equity.

6. Running payroll late

Employers not only have the legal obligation to pay the wages that their employees earn, but to pay them on time. Many jurisdictions —as well as most awards, enterprise agreements, or registered agreements— regulate the frequency and timing of payroll. Additionally, when an employee leaves the company, the applicable law or award may specify the timing of their final payment.

7. Manually entering payroll data

Sifting through a myriad of forms and spreadsheets or manually entering the same information into several systems leaves room for error, which creates a greater risk of non-compliance.

8. Managing time and pay in separate systems

Disparate systems are challenging for many payroll administrators as payroll, time, and HR data are housed in different places. This makes it hard for information to be updated or audited during the payroll cycle, which increases the risk that something will go wrong during the “payroll crunch.”

Beyond the cost of payroll fines and penalties

Payroll is complex, and it is crucial to manage it accordingly, especially in these uncertain times.  Violating laws such as the Fair Work Act 2009 or the terms of an applicable award or agreement can lead to severe repercussions for retailers. Inaccurate pay and tax deductions can also damage employee retention and engagement.

To mitigate the risk of penalties, fines, and employee dissatisfaction, employers must ensure they’re not infringing on their employees’ rights by staying on top of the ever-changing compliance landscape. Combining payroll, employee record keeping, scheduling, and time and attendance in a single HCM system will help administrators manage large amounts of data during crunch time to pay employees accurately and on time.

Reinvent how you pay your people in a rapidly changing world of work.

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