As Australian businesses brace for the impact of new wage theft laws under The Closing Loopholes Acts, data from Yellow Canary, Australia’s leading payroll audit and compliance platform, highlights significant uncertainty and concern.

According to Yellow Canary’s 2025 State of Payroll Compliance Report, released Friday, nearly one in five businesses (17 per cent) are unsure if they are paying employees correctly.

The report also found that 19 per cent suspect underpayment issues but have yet to confirm them, while 40 per cent of compliance leaders worry about the increased administrative burden from the new laws that took effect on 1 January.

Marcus Zeltzer, Founder and Managing Director of Yellow Canary said, “It is concerning that so many businesses are unsure about their compliance status. When you combine this uncertainty with changing laws and additional administrative demands, it is highly likely we’ll continue to see headlines about underpayments."

Employers who deliberately underpay their employees now face significant penalties, including criminal sanctions and fines of up to $1,565,000 for individuals, and the greater of $7,825,000 or three times the underpayment amount for corporations.

“Payroll accuracy depends on human resources, legal, technology, and workforce planning working together. Adapting to changes across these functions has been difficult, leading many businesses to remain reactive instead of proactive in managing compliance,” he explained.

Reviewing billions of dollars in payroll records, Yellow Canary found that underpayments often amount to 1 to 3 per cent of payroll—a systemic issue businesses must address to avoid escalating problems.

Zeltzer added that proactive measures, supported by a culture of compliance, are critical to avoiding underpayment risks and penalties.

“The key to improving compliance lies in people, processes, and platforms,” Zeltzer said. “Businesses must prioritise regular payroll audits, leverage advanced compliance technology for transparency, and foster cross-functional collaboration to adapt to evolving laws.”

Despite the challenges, the report indicates progress. Zeltzer highlighted that 22 per cent of businesses have already identified underpayment issues and are actively working to resolve them. Additionally, 56 per cent of businesses currently use payroll auditing technology, while another 22 per cent plan to implement proactive compliance solutions in 2025—demonstrating a clear shift towards more proactive compliance practices.

“Employers have two core responsibilities: keeping employees safe and paying them correctly,” he said. “Over the last 40 years, workplace safety became a constant priority. Now, we’re seeing the early stages of a similar evolution in payroll compliance.”

About Yellow Canary

Yellow Canary is the provider and developer of Australia’s leading payroll audit and compliance platform, empowering businesses to take control of their workforce compliance obligations.

By leveraging advanced automation and Artificial Intelligence (AI), their platform supports proactive management of employee payments, entitlements, superannuation, and long service leave, offering both historical and ongoing compliance reviews to navigate the complexities of the industrial relations landscape.

Download the 2025 State of Payroll Compliance report: https://www.yellowcanary.com.au/resources/free-downloads/2025-state-of-payroll-compliance-report