Key Payroll Changes Employers Need to Know
The start of the new financial year has brought several important payroll changes that all Australian employers should be aware of. Ensuring your payroll systems are updated now will help avoid underpayments, compliance issues and penalties.
1. Minimum Wage and Award Wage Increases
From the first full pay period commencing on or after 1 July, minimum wage rates and most modern award wages have increased following the Fair Work Commission’s Annual Wage Review. Employers should ensure that:
- Payroll software has been updated with the new pay rates.
- Employees are correctly classified under the relevant award.
- Allowances, penalty rates and overtime calculations reflect the new award rates.
- Salaried employees remain better off overall than their applicable award entitlements.
Businesses that have not yet updated their payroll should do so immediately to avoid underpayment risks.
2. Superannuation Guarantee
The Superannuation Guarantee (SG) rate has now reached 12% of an employee’s ordinary time earnings, completing the Government’s scheduled increases.
Employers should ensure:
- Payroll systems calculate super at the correct rate.
- Employment contracts and salary packages are reviewed where remuneration is expressed as “inclusive of super”.
- Salary sacrifice arrangements continue to operate correctly.
Failure to pay the correct amount of super can result in significant penalties and interest.
3. Preparing for Payday Super
Although not yet in effect at the time many businesses updated their payroll systems, employers should begin preparing for Payday Super, which is scheduled to commence from 1 July 2026.
Under the new regime:
- Super contributions will generally need to be paid each payday rather than quarterly.
- Businesses will need sufficient cash flow to fund super at the same time as wages.
- Payroll processes and software should be reviewed well before implementation.
Businesses that still process super manually should consider moving to automated payroll systems to simplify compliance.
4. Payroll System Review
The commencement of a new financial year is an ideal opportunity to review your payroll systems by ensuring:
- employee pay rates are current;
- superannuation is calculated correctly;
- leave accruals are accurate;
- salary sacrifice arrangements are operating correctly;
- new tax scales and payroll settings have been applied where required; and
- employee records remain complete and up to date.
Don’t Forget Record Keeping
The Fair Work Ombudsman continues to focus on payroll compliance, with substantial penalties applying for wage underpayments and poor record keeping. Regular payroll reviews can identify issues before they become costly.
If you would like us to review your payroll system, verify your award classifications or conduct a payroll health check, please contact our office. Early identification of issues is significantly less expensive than rectifying historical payroll errors following an employee complaint or Fair Work investigation.