By Mile Dimkovski – Executive Director
Payroll is the function everyone needs, but nobody wants to think about on a day-to-day basis, until something goes wrong. A missed overtime rate or late superannuation payment can quickly erode trust and expose your business to penalties. As one SMC client put it, “We didn’t realise how much risk was hiding in our old payroll system until we had to explain it to the board.” This is the reality for many Australian organisations. Recent wage scandals at major employers weren’t about intent, they were about outdated payroll systems unable to keep up with complex awards and compliance.
From 1 January 2025, new federal laws mean directors and senior managers can be held personally liable for wage underpayments, even if unintentional. Penalties now include substantial fines and potential jail time. Directors are expected to demonstrate proactive payroll compliance and governance, making it essential for boards to treat payroll as a standing agenda item, not just an operational detail.
For years, payroll teams have worked in survival mode. Compliance updates, award interpretation, and manual data checks take up most of their time. SMC’s experience shows that most errors stem from legacy systems and manual workarounds, not deliberate misconduct.
The Real Cost of Traditional Payroll
Payroll errors aren’t just inconvenient, they’re expensive and reputationally damaging. In 2023–24, the Fair Work Ombudsman recovered $473 million in back payments for Australian workers, with over half coming from large corporate employers.
Traditional systems demand constant attention. Award rates change. Tax thresholds shift. New compliance rules appear with little warning. Payroll professionals spend hours cross-checking regulations and calculations. There’s little time left for strategic work.
How AI Changes Everything
Modern payroll platforms, powered by AI, do more than automate. They adapt, learn, and predict, helping organisations keep pace with regulatory change and award complexity. SMC has seen clients reduce payroll exceptions and compliance risk by moving from patchwork systems to integrated, scalable platforms.
AI spots patterns humans miss. It flags unusual work patterns, detects timesheet discrepancies, and predicts cash flow needs. Payroll teams can move from firefighting to planning.
Award interpretation becomes manageable. AI parses complex agreements, applies the right rates, and highlights anything that needs review. What once took hours now happens instantly.
From Compliance to Competitive Advantage
The real value comes when payroll data connects with broader workforce insights. Integration across HCM, WFM, and payroll is essential. Siloed systems create risk, integrated platforms create value and confidence for boards and executives.
From Complexity to Confidence: Modernising Payroll at Just Better Care
Just Better Care, Australia’s largest franchised provider of in-home aged care, faced a complex challenge: rolling out new HR and payroll systems across 55 territories, each with its own award interpretation requirements and compliance risks. Legacy systems and manual workarounds had created operational risk and limited efficiency.
SMC provided senior project leadership, robust governance, and hands-on change management. Our team worked closely with Just Better Care to design and test a scalable award interpreter, ensuring every franchise could manage complex pay rules accurately and consistently. We established clear frameworks for compliance and stakeholder coordination, so nothing was left to chance.
The result? The multi-system rollout was delivered five months ahead of schedule, with improved award interpretation, reduced compliance risk, and a scalable platform for future growth.
“The streamlined project management support enabled our team to manage a complex systems migration project, and supported the smooth implementation of new integrated systems across our network.”
— Alison Chandler, CEO, Just Better Care
This is what’s possible when governance and technology align, and when award interpretation is treated as a board-level priority, not just an operational detail. Read the full case study
The Human Element Remains Essential
AI doesn’t replace payroll professionals, it elevates them. Technology handles the complexity; people provide judgement, empathy, and strategic direction. SMC’s clients report that freeing payroll teams from manual tasks lets them focus on workforce planning and employee experience.
Governance: The Foundation of Responsible AI
As AI takes on more payroll decision-making, robust governance is non-negotiable. Boards and executives must set clear frameworks for transparency, accountability, and audit. SMC recommends treating payroll governance as a standing board agenda item, not just an operational detail.
Without proper governance, AI implementations risk compliance failures, discriminatory practices, and erosion of employee trust, the very issues they’re meant to solve.
Your Roadmap to AI-Powered Payroll
You don’t need to change everything at once. Here’s a practical five-step approach:
- Set Your Strategy and Roadmap: Define what success looks like. Align payroll transformation with business goals. Build governance in from day one.
- Clarify Your Requirements: List your pain points and compliance needs. Stay open to new insights AI may reveal.
- Choose the Right Partners: Select vendors who understand your industry and offer ongoing support, not just software.
- Plan Your Rollout: Deploy in stages. Minimise disruption. Allow time for testing and training.
- Start Smart: Begin with a high-impact area like compliance monitoring. Measure results. Use early wins to build momentum.
The Time Is Now
AI-powered payroll is here. Boards and executives who act now gain advantages beyond the pay cycle, smarter decisions, stronger relationships, and sustainable growth.
SMC’s track record, across sectors and scales, shows that with the right partner, payroll and HR transformation delivers measurable results, not just promises.
As one client told us, “We didn’t just fix payroll. We built a foundation for growth.”
The question isn’t whether AI will transform payroll. It’s whether your organisation will lead that transformation or scramble to catch up.
Frequently Asked Questions
Why is payroll compliance suddenly a board-level issue?
Because it is no longer optional. From 1 January 2025, directors and senior managers can face personal fines or jail time for wage underpayments, even accidental ones. Payroll risk now sits firmly in the governance domain, not the back office.
How does AI actually reduce payroll risk?
AI monitors legislation, award changes, and tax rules in real time, applying updates automatically. It flags anomalies before they become breaches, helping organisations prevent underpayments instead of apologising for them later.
Will AI replace payroll professionals?
No, it makes them more valuable. AI removes the repetitive tasks that drain capacity, allowing payroll experts to focus on analysis, governance, and strategy. Technology handles compliance; people provide accountability and context.
What is the hidden cost of staying on a legacy system?
Every manual workaround compounds risk. Legacy platforms do not scale with regulatory change, which means errors go unnoticed until auditors or the media find them. By then, the cost is not just financial, it is reputational.
What does good payroll governance look like in the age of AI?
It is transparent, data driven, and accountable. Boards should demand clear audit trails, bias monitoring, and documented decision logic for any AI driven outcomes. Payroll governance now belongs on every board agenda.
Where should organisations start with AI powered payroll?
Start small, but start smart. Focus on one high impact area, such as compliance monitoring or award interpretation, prove the value, and scale. Transformation succeeds when strategy leads technology, not the other way around.
What results are top performers seeing?
Leading organisations are cutting payroll processing time by up to 75 percent, improving accuracy, and surfacing workforce insights that directly inform financial planning. Payroll is not just a cost centre anymore, it is an intelligence engine.
How does SMC support this transformation?
SMC brings independent expertise across payroll, HR, and digital transformation. We help boards and executives design governance frameworks, select the right platforms, and implement AI responsibly with measurable results and zero vendor bias.