Payroll is where small errors get expensive fast — in penalties, back-pay and lost trust. Here are six common payroll mistakes Australian employers make, and how to avoid them.
1. Misinterpreting the award
Awards like SCHADS, the Clerks Award, building and retail awards are complex — penalty rates, allowances, casual loading, broken shifts and minimum engagements all interact. Getting the interpretation wrong is the single most common (and costly) payroll mistake. Fix: use someone with genuine, hands-on award experience.
2. Paying super late (or wrong)
Superannuation has strict deadlines, and late or incorrect super can become a personal liability for directors and attract significant charges. Fix: calculate super correctly each pay run and pay it on or before the due date — many businesses now pay more frequently to stay ahead.
3. Misclassifying employees and contractors
Treating someone as a contractor when they're really an employee can lead to back-paid super, leave and penalties. Fix: apply the proper tests and review arrangements regularly.
4. Getting STP reporting wrong
Single Touch Payroll must be reported to the ATO each pay run, and year-end finalisation must be accurate. Mistakes flow straight through to employees' income statements. Fix: use properly configured software and finalise STP carefully at year-end.
5. Incorrect leave accruals
Annual, personal and long service leave need to accrue correctly for each employee type. Errors here quietly build up and surface at the worst time — usually a termination. Fix: set up leave correctly from the start and check it periodically.
6. Poor record-keeping
Payroll records must be kept and be accurate. Sloppy records make audits painful and disputes hard to resolve. Fix: keep clean, reconciled payroll records as part of your regular bookkeeping.
Payroll done well is invisible. Payroll done poorly can cost you staff, money and sleep.
Take payroll off your plate
Maree handles payroll for businesses from 1 to 1,100 employees, with confident award interpretation and full STP and super compliance. See payroll services or get in touch.
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