Australia’s Wage Scandals: A Symptom of Outdated Payroll Systems

The Federal Court’s ruling against Woolworths and Coles last week has sent shockwaves through corporate Australia.

The decision revealed billions in underpayments tied to salaried team leaders, not because of deliberate wage theft, but because payroll systems were never designed to handle the complexity of modern awards, overtime, and penalty rates.

When two of the country’s largest employers admit their systems failed at scale, the message is clear: this is not an isolated problem. It is a systemic issue affecting organisations across industries.

More Than a Payroll Problem

Too often, payroll is seen as a back-office function, something operational teams manage behind the scenes. However, the Woolworths and Coles case demonstrates that payroll is a governance issue.

• Legacy systems: Many organisations still rely on payroll platforms that were built decades ago. These systems struggle with today’s regulatory environment, complex awards, and flexible work patterns.
• Manual workarounds: Where systems fall short, spreadsheets and assumptions creep in. This creates gaps that remain invisible until regulators, unions, or courts shine a light.
• Transformation challenges: Even when organisations attempt to modernise, poor planning, rushed implementations, or a lack of governance can introduce new risks instead of resolving old ones.

Outdated payroll platforms are a hidden factor behind many of these scandals. Systems such as Preceda, Chris21, Aurion, and MYOB PayGlobal were not designed for the complexity of today’s awards or flexible work arrangements. They leave organisations exposed to underpayment risks that manual checks and spreadsheets simply cannot catch.

“Underpayment isn’t usually about intent; it’s about systems failing at the detail. The moment employees work outside standard hours, overtime, weekends, or flexible arrangements, annualised salaries fall short unless award rules are applied correctly. Legacy systems can’t reconcile that complexity. Modern platforms automate it in real time, closing the gap before it becomes a billion-dollar liability.”

At SMC, we’ve seen this first-hand across many of our recent projects. Organisations that acted early to modernise their payroll, HR and workforce management systems have safeguarded themselves against the same compliance pitfalls now costing others significant money and reputational damage – as shown in our recent case study, where a leading financial services organisation replaced a patchwork of HR systems with a scalable, compliant HCM platform.

Why Boards and Executives Should Pay Attention

This is no longer just an HR issue. With underpayment now criminalised under Australia’s Closing Loopholes legislation, the stakes have never been higher.

Boards and executives are responsible for ensuring systems are fit for purpose. Failure to modernise payroll and workforce management is no longer a matter of operational inefficiency; it exposes organisations to legal penalties and destroys public trust.

A Practical Path Forward

Avoiding the next wage scandal requires more than patching systems. It demands proactive leadership and a structured plan:

1. 1. Review current payroll and workforce management systems — identify where compliance risks sit today.
   2. Invest in platforms that automate award interpretation — ensure complexity is handled consistently and accurately.
   3. Embed governance frameworks — use regular reconciliation, oversight, and reporting to detect issues before they escalate.
   4. Prioritise change management — successful payroll transformations depend on getting both the technology and the people side right.
   5. Make payroll modernisation a safeguard — done properly, it protects employees, shareholders, and the reputation of the organisation.

The Lesson of Woolworths and Coles

The Woolworths and Coles underpayment scandal is a wake-up call. If Australia’s largest employers, with their resources and compliance teams, can fail at this scale, no organisation is immune.

Leaders need to act before they are forced to by regulators, unions, or the media. The cost of inaction is measured not only in dollars, but in trust.

With more than 750 successful transformations across Australia and New Zealand, SMC has helped organisations replace outdated payroll and workforce systems, navigate compliance complexity, and avoid the costly mistakes now making headlines.

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