According to the 2025 State of Payroll Compliance Report, 37 per cent of organisations cite poor communication between departments as a top barrier to payroll compliance.
This means payroll outcomes are rarely shaped by payroll alone. There are different functions in organisations which all influence how employees are paid, stemming from how roles are classified, to how rosters are managed, to how systems process and calculate entitlements.
Even with strong platforms and processes in place, paying employees correctly and managing payroll compliance risks early depends on how well these teams collaborate, interact and share information.
This blog explores why payroll compliance requires a cross-functional approach and sets out five practical steps organisations can take to strengthen collaboration, build a culture of shared accountability, and reduce risk.
Payroll compliance is a shared responsibility
Payroll compliance is not the responsibility of a single team. While payroll processes pay, accuracy depends on a wider set of activities that sit across the organisation.
At Yellow Canary, we frame this through four interconnected pillars:
- Legal: interpretation of awards, enterprise agreements, contracts and regulatory obligations
- Workforce planning: how employees are classified, scheduled and managed
- Payroll operations: the systems, calculations and processes that drive pay outcomes
- Technology: the tools and automation that connect and support each of these areas
No single team can oversee all four pillars in isolation. Payroll compliance requires shared ownership, effective communication and clear accountability across functions.
Why Human Resources is key
Within this shared model, some functions have a particularly important role to play.
Human Resources holds a unique position. On one hand, Human Resources directly contributes to payroll outcomes through areas such as employee classifications, contract terms, and company policies. Decisions made here flow straight into how pay is calculated and applied.
On the other hand, Human Resources is also well placed to bring people together across departments. As a function that interacts with payroll, legal, finance, operations and leadership, HR can help foster the communication, alignment and culture needed for payroll compliance to be seen as a collective responsibility.
This dual role, both contributing to payroll data and enabling cross-functional collaboration, makes HR a central player in building sustainable, organisation-wide payroll compliance.
Why communication matters for payroll compliance
Communication plays a critical role in strengthening payroll outcomes. It influences how teams share information, make decisions and respond to complexity.
Strong communication enables:
- Timely updates: Changes to roles, hours or conditions are captured early and actioned correctly
- Shared visibility: Teams understand how their decisions impact pay, reducing misalignment
- Clarity on ownership: Responsibilities are clearly defined across departments and handovers
- Faster issue resolution: Risks are surfaced, escalated and addressed without unnecessary delay
- Cultural alignment: Compliance becomes a collective focus across teams, supported by routine collaboration
When communication is consistent and deliberate, organisations are better positioned to deliver accurate pay outcomes and maintain long-term compliance.
5 ways to strengthen communication and support ongoing payroll compliance
To reduce risk and build a sustainable culture of payroll compliance, organisations can take practical steps to break down silos and improve cross-functional collaboration.
- Make payroll risk visible across teams
Bring HR, payroll, finance and legal into the same room, physically or virtually, when reviewing upcoming changes or interpreting complex employment terms. Give them shared visibility of risk areas and decisions. - Build clear handover processes
When employee details change, define who updates what, by when, and how it is communicated. Use automated workflows where possible, but make sure accountability is clear. - Treat compliance as an ongoing conversation
Set up regular touch-points, not just when things go wrong, to share lessons from audits, review changes in legislation, or plan for seasonal complexity. A 30-minute monthly meeting can prevent much bigger issues later. - Clarify escalation and decision rights
Sometimes a delay is not about disagreement, but uncertainty. Map out who owns decisions on pay interpretation, policy alignment and risk appetite, so teams do not get stuck in limbo. - Champion shared accountability from the top
Executives, especially CPOs, play a key role in making compliance part of the culture. Reinforce that accurate pay is not the job of one team, it is a whole-of-business responsibility that deserves ongoing focus.
Stronger together
Improving payroll compliance requires more than systems and policies. It depends on how effectively people work together across teams.
The 2025 State of Payroll Compliance Report highlights a clear opportunity: communication remains one of the most common challenges, and one of the most impactful areas for improvement.
When HR leaders and CPOs are involved in payroll to build stronger connections, organisations are better equipped to support cross-functional alignment, encourage shared accountability, and shaping the environment where payroll gets done right.
Yellow Canary is an automated payroll compliance platform that analyses how employees are paid against the relevant rules and entitlements. It delivers clear payroll data insights for leaders and compliance teams, making it easier to collaborate, address risks, and build confidence that payroll accuracy is under control.
* Yellow Canary content on this website is intended solely for the purpose of offering commentary and general knowledge. The content is not intended to constitute legal advice. You should seek legal or other professional advice before acting or relying on any of the content.
