Editor’s note: Originally published in September 2025, this article has been refreshed to reflect the ongoing compliance and governance challenges organisations face as payroll scrutiny and wage-theft enforcement continue to intensify across Australia. Legacy payroll systems and payroll compliance risk are becoming major governance concerns for Australian organisations.
The Federal Court’s ruling against Woolworths and Coles reinforced a growing reality for Australian organisations: payroll compliance risk is increasingly becoming a systems and governance issue.
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Outdated payroll platforms are a hidden factor behind many of these scandals.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.
Practical Steps Organisations Should Take Now
Avoiding the next wage scandal requires more than patching systems. It demands proactive leadership and a structured plan:
- Review current payroll and workforce management systems to identify where compliance risks sit today.
- Invest in platforms that automate award interpretation and ensure complexity is handled consistently and accurately.
- Embed governance frameworks including reconciliation, oversight, and reporting processes to detect issues before they escalate.
- Prioritise change management, successful payroll transformations depend on getting both the technology and the people side right.
- Treat payroll modernisation as a safeguard for employees, shareholders, and organisational reputation.
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.
In these environments, WFM accuracy and upstream time and attendance data are critical inputs to both payroll accuracy and productivity outcomes.
Frequently Asked Questions: Payroll Compliance and Legacy Payroll Systems
The underpayments were linked to payroll systems that struggled to manage the complexity of modern awards, overtime, penalty rates, and salaried arrangements. The issue highlighted how legacy payroll platforms can create systemic compliance risks at scale.
Yes. Many organisations still rely on legacy payroll and workforce management systems that were not designed for today’s regulatory complexity, flexible work arrangements, or modern award interpretation requirements.
Older payroll platforms often depend on manual workarounds, inconsistent configurations, spreadsheets, and disconnected integrations. These gaps can create hidden payroll errors that are difficult to detect until regulators, unions, or audits intervene.
Many organisations are reviewing legacy platforms including Preceda, Chris21, Aurion, and MYOB PayGlobal as part of broader payroll modernisation and compliance risk reduction programs.
What should boards and executives do to reduce payroll compliance risk?
Boards and executives should review payroll and workforce management systems, assess governance controls, identify manual dependencies, improve reporting visibility, and ensure payroll configurations align with current award obligations and legislation.
Yes. With increased wage-theft enforcement and the criminalisation of intentional underpayment under Australia’s Closing Loopholes legislation, payroll governance is increasingly being treated as a leadership and risk management responsibility.
Modern payroll and workforce management systems can automate award interpretation, improve audit visibility, reduce manual processes, and apply complex payroll rules more consistently across the organisation.
A structured payroll and workforce systems review is typically the first step. This helps organisations identify compliance gaps, operational risks, integration issues, and opportunities to improve governance and automation.
About the Author
Rob Stummer
Rob Stummer is Director of Growth at SMC, leading strategic growth, market expansion, and commercial partnerships across Australia and New Zealand. With more than 25 years of experience in enterprise software, ERP, and fintech across APAC, he has a strong track record of scaling high-growth businesses and driving sustainable performance. Rob has held senior leadership roles at organisations including Pagero, SYSPRO, and IFS, where he led go-to-market execution, operational transformation, and regional expansion. He also supports SMC clients as a strategic advisor on complex ERP and transformation programs.
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