The High-Risk Industries Guide to Payroll Compliance in Australia

Payroll compliance is no longer just about avoiding mistakes. For high-risk industries in Australia, it’s a reputational, legal, and financial imperative. With the introduction of criminal wage theft laws in 2025, employers in sectors like hospitality, construction, retail, and healthcare are under the spotlight more than ever.

This guide explains why these industries are most exposed, what payroll compliance really means in 2025, and how legal, HR, and operations leaders can proactively manage risk before the Fair Work Ombudsman (FWO) comes knocking.

Why Some Industries Face Higher Payroll Compliance Risk

Certain sectors face greater exposure to underpayment risk due to a combination of factors:

1. Complex Modern Awards

High-risk industries often operate under highly detailed awards like:

• Hospitality Industry (General) Award 2020
• Building and Construction General On-site Award 2020
• Retail Award 2020
• Health Professionals and Support Services Award 2020

These awards include nuanced clauses around:

• Overtime and weekend penalty rates
• Allowances (e.g., tools, travel, clothing)
• Classification levels and age-based pay
• Split shifts and broken shifts
• Site-specific entitlements

2. Variable and Casualised Workforces

Industries with large casual, part-time, or shift-based staff are harder to manage due to:

• Irregular hours and rosters
• Frequent changes in staff or location
• Lack of real-time time tracking systems

3. Flat Rate and Salary Models

Many businesses in construction or hospitality pay “all-inclusive” flat rates or salaries. But if not benchmarked properly against award entitlements, these models risk systematic underpayment.

What Payroll Compliance Means in 2025

Payroll compliance refers to a business’s ability to ensure employees are paid correctly, fairly, and legally. In 2025, it now involves:

• Classifying employees correctly
• Paying minimum base rates under the correct award
• Applying correct penalty rates and overtime
• Honouring allowances and site-specific rules
• Making timely superannuation and tax payments
• Keeping full records (payslips, rosters, timesheets)

Failure to comply can result in civil penalties, back payments, brand damage, and — under new laws — criminal charges for deliberate underpayments.

2025 Legislative Landscape: What Changed

As of January 2025, wage theft is now criminalised nationwide. That means:

• Individuals (including directors) can face up to 10 years in jail for intentionally underpaying staff.
• Businesses may be fined up to $7.8 million per offence.
• Enforcement is intensifying: The FWO has been funded to proactively audit sectors most at risk.

Top 5 Payroll Risks in High-Risk Sectors

1. Misclassification of Employees

It’s common to assign employees the wrong level or type under an award — especially juniors or apprentices — leading to long-term underpayments.

2. Incorrect Penalty Rate Application

Penalty rates for nights, weekends, public holidays, and overtime differ by award and classification level. These are frequently miscalculated or missed.

3. Missing Allowances

Travel, uniform, tools, first aid, meal, and site allowances must be paid if conditions are met — but are often overlooked.

4. Roster and Timekeeping Errors

Without proper time and attendance tracking, it’s difficult to prove hours worked, paid breaks, or late-night shifts were treated correctly.

5. Superannuation Shortfalls

Paying super only on base salary (not leave loading, bonuses, etc.) can create shortfalls that attract ATO scrutiny and interest.

How to Build a Payroll Compliance Framework (Step-by-Step)

Here’s how legal and HR teams in high-risk sectors can build a robust payroll compliance program in 2025:

Step 1: Map Your Awards

Identify which awards and EBAs apply across your workforce. Maintain a summary matrix by role, classification, and location.

Step 2: Benchmark Pay Rates

Compare current hourly/salary payments against minimum award obligations. Don’t forget overtime, penalties, and allowances.

Step 3: Implement Timekeeping & Recordkeeping Tools

Use digital systems to record:

• Start/finish times
• Breaks
• Overtime approvals
• Location-based shifts

These records are legally required and protect you in case of disputes.

Step 4: Conduct Regular Wage Audits

At least twice per year, run payroll audits to:

• Compare actual pay vs legal obligations
• Flag over/underpayments
• Identify systemic issues early

Step 5: Create a Remediation Plan

If underpayments are found, immediately:

• Calculate and pay back wages
• Update payroll settings
• Document steps taken
• Seek legal guidance if needed

Why Legal and HR Teams Should Work Together

Many compliance issues arise when teams work in silos. To fix that:

• HR teams should review rosters and awards
• Legal teams should interpret obligations and ensure privilege
• Finance should confirm payment execution
• Payroll should validate accuracy and controls

This collaboration is essential — especially when preparing for a legally privileged wage audit.

How Subi Helps High-Risk Businesses Stay Compliant

Subi is Australia’s leading wage compliance platform — used by law firms, accountants, and businesses to run wage audits and payroll reviews at scale.

With Subi, you can:

• Connect directly to payroll systems (e.g. Xero, KeyPay, MYOB)
• Automatically benchmark wages against modern awards
• Flag risks across allowances, classifications, loadings
• Export audit-ready reports for legal or FWO purposes
• Run audits internally, or via Subi’s vetted partner marketplace

For high-risk sectors, Subi turns complex award logic into simple, structured checks — minimising exposure and cost.

Final Word: High Risk = High Responsibility

If you operate in construction, hospitality, retail, or healthcare — you’re on notice in 2025.

Being “mostly compliant” is no longer enough. Between criminal wage theft laws, proactive FWO audits, and rising employee awareness, only those with airtight systems, processes, and tools will avoid serious consequences.

Start now. Run a wage audit. Benchmark pay rates. Fix problems early.

Payroll compliance isn’t just about risk — it’s about reputation.

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