Payroll compliance audit checklist
Payroll errors are the leading cause of underpayment claims and regulatory action by the Fair Work Ombudsman. A structured audit helps identify shortfalls before they become enforcement matters or class actions.
This is a 12-step checklist for conducting a payroll compliance audit under Australian employment law. It covers wages, superannuation, PAYG withholding, leave accruals, and record-keeping requirements.
The checklist
Define audit scope
Determine the period, employee cohort, and payroll elements to be audited (wages, super, allowances, leave).
Gather payroll records
Collect pay runs, time sheets, rosters, and payroll system exports for the audit period.
Verify award and agreement coverage
Confirm each employee is paid under the correct modern award, enterprise agreement, or common law contract.
Test base pay rates
Compare actual pay against the applicable minimum rates, including any annual increases from the Fair Work Commission.
Test overtime and penalty calculations
Recalculate overtime, weekend, public holiday, and shift penalties for a sample of pay periods.
Verify superannuation contributions
Check SG contributions are calculated on the correct OTE base and paid by the quarterly due date.
Audit PAYG withholding
Confirm PAYG amounts are withheld at the correct rate based on TFN declarations and reported to the ATO.
Review leave accruals
Reconcile annual leave, personal leave, and long service leave balances against entitlements under the NES and applicable state legislation.
Check termination payments
Verify notice periods, redundancy pay, and final pay calculations for any employees terminated during the audit period.
Review pay slip compliance
Confirm pay slips include all prescribed particulars and are issued within one business day of payment.
Quantify underpayment exposure
Calculate total underpayment amounts, interest, and potential penalties for any shortfalls identified.
Prepare remediation plan
Document findings and prepare a remediation plan including back-payments, process fixes, and a voluntary disclosure strategy if appropriate.
When this checklist applies
Use during scheduled payroll audits, before or after a Fair Work Ombudsman enquiry, or as part of due diligence in M&A transactions.
Common pitfalls
- Auditing pay rates but ignoring superannuation shortfalls
- Failing to sample across different employee classifications
- Not accounting for state long service leave variations
- Missing the SG charge deadline and triggering the Part 7 penalty regime
- Treating annualised salary arrangements as automatically compliant
Run this checklist on a real matter
Quillio can reconcile payroll data against award rates, flag underpayment patterns, and draft remediation calculations. See /practice-areas/employment-lawyers or start a free trial.
General payroll audit guidance. Underpayment quantification and voluntary disclosure strategies depend on specific facts — obtain specialist employment law advice.
Use this checklist on your matter.
Quillio can run this checklist on a specific NSW conveyancing matter — confirm each item, calculate adjustments, and generate the supporting documents. The free trial requires no credit card.
Start your free trial