Payroll Underpayment Claims Remind Us Why Compliance Cannot Be Ignored

Another major Australian employer, Seven West Media, is now facing a class action over alleged payroll underpayments and breaches of workplace entitlements. While the case will unfold in the courts, the headlines alone are a stark reminder: payroll isn’t just about paying people on time — it’s about accuracy, compliance, and protecting your people and your business.

The real cost of payroll errors

When payroll mistakes happen at scale, the fallout can be severe:

• Damaged trust – employees lose confidence in their employer when pay isn’t right.
  
• Reputational harm – underpayment scandals rarely stay quiet; they often dominate headlines.
  
• Regulatory scrutiny – once flagged, businesses attract ongoing attention from Fair Work.
  
• Financial consequences – back payments, fines, and legal fees often far outweigh the original errors.
  

Why underpayments happen

The reality is most large-scale underpayments aren’t deliberate — they’re the result of complex rules and weak processes. Australia’s payroll environment is one of the most complicated in the world, with layers of:

• Federal and state legislation
  
• Modern awards and enterprise agreements
  
• Superannuation obligations
  
• Tax requirements
  

Common causes include:

• Manual data handling
  
• Misinterpreted awards
  
• Outdated systems
  
• Lack of trained payroll professionals
  

Too often, businesses assume their payroll setup is sound — until regulators or employee representatives uncover gaps.

What this means for SMEs

While headlines often focus on big corporates, smaller businesses are equally at risk — sometimes more so. With leaner resources and fewer checks and balances, SMEs cannot afford to treat payroll as just another back-office task.

The risks are clear:

• Errors are costly – even small underpayments can trigger serious claims.
  
• Employee trust is fragile – once lost, it impacts loyalty and retention.
  
• Compliance is non-negotiable – Fair Work’s enforcement is widening, not narrowing.
  

How to reduce payroll risk

Preventing underpayment issues means treating payroll as a professional, compliance-driven function. Key actions include:

• Regular compliance reviews – audit payroll processes frequently, not just when problems arise.
  
• Qualified payroll staff – invest in training or accredited professionals who understand awards and legislation.
  
• Smarter use of technology – modern payroll systems, time and attendance tools, and employee self-service can reduce errors — but only if properly configured.
  
• Clear processes and records – define responsibilities, keep documentation, and separate duties to avoid both mistakes and fraud.
  
• Proactive communication – keep staff and managers informed about entitlements and legislative changes.
  

Key takeaway for SMEs

The Seven West Media case is another reminder that payroll errors can hit any business — and the costs are always higher than the investment it would take to get payroll right.

For SMEs, the message is simple:

• Don’t assume your payroll is correct — test and review it.
  
• Equip your people and systems to handle complexity.
  
• Build compliance into your culture, not just your processes.
  

Payroll isn’t just an admin task — it’s a compliance obligation and a trust-builder. Getting it right protects your business, your people, and your reputation.