One year after the introduction of criminal wage theft laws, payroll compliance continues to demand sustained attention from Australian organisations. Expectations around pay accuracy, audit discipline, and accountability have increased, while payroll obligations have expanded through upcoming changes such as payday super and ongoing updates to modern awards.
Yellow Canary's 2026 State of Payroll Compliance Report provides a snapshot of how organisations are responding. Based on insights from 540 compliance decision makers, the findings show progress alongside persistent exposure to payroll compliance risk.
Confidence is rising but certainty still lags
64 percent of organisations report confidence in their payroll compliance. This confidence often reflects trust in existing processes, past audits, or system controls.
At the same time, 36 percent remain unsure they pay employees correctly. While this highlights exposure, it also signals greater awareness of complexity and hidden risk.
Across both groups, the same issue appears. Strong intent and established controls do not always keep pace with changing roles, rostering practices, and award interpretation. Without regular audits, assumptions go untested and variance accumulates quietly.
Action is widespread but consistency varies
Following the January 2025 wage theft reforms, 89 percent of organisations introduced new payroll compliance measures. The most common actions included increased staff training and awareness, added internal or external resources, new systems or procedures, enhanced system integration, and conducting a thorough payroll audit.
However, how organisations apply these measures differs. 35 percent now conduct payroll audits quarterly, embedding payroll compliance into routine operations. This cadence supports earlier identification of variance and more controlled remediation.
In contrast, 5 percent continue to rely on reactive audits triggered by complaints or incidents. This approach treats payroll risk as an exception rather than an ongoing operational responsibility.
Award interpretation remains the pressure point
Modern awards and enterprise agreements continue to be the most common source of payroll compliance risk, cited by 4 in 10 organisations.
Issues tend to arise when roles evolve, classifications shift, or working patterns change without corresponding updates to payroll rules. In these situations, payroll systems may process calculations accurately, but against interpretations that no longer reflect how work is actually performed.
Regular audits play a critical role in closing this gap by testing pay outcomes against operational reality and identifying where award interpretation has fallen out of step with practice.
What these findings mean for employers
The findings highlight a clear shift in expectations. Payroll compliance now requires demonstrable oversight, not just confidence statements.
For employers, this means understanding where payroll risk concentrates, how frequently pay outcomes are audited, and how quickly issues can be identified and addressed. As payday super approaches, tolerance for ambiguity around pay timing and accuracy will continue to narrow.
Organisations that treat payroll compliance as an ongoing discipline, supported by regular audits and shared accountability across payroll, HR, finance, and legal teams, place themselves in a stronger position to manage risk as obligations continue to expand.
Yellow Canary's 2026 State of Payroll Compliance Report explores these insights in depth, offering benchmarks and practical guidance for employers navigating payroll compliance in 2026.
