Australian businesses are navigating a landscape of rising compliance complexity as new wage theft laws under The Closing Loopholes Acts take hold.

According to the 2025 State of Payroll Compliance report released Friday by Yellow Canary, a leading payroll audit and compliance platform, nearly one in five businesses (17 per cent) are unsure if they are paying employees accurately, with 19 per cent suspecting but not confirming underpayment issues.

The report highlights that 40 per cent of compliance leaders are concerned about the increased administrative burden created by the new laws, which took effect on 1 January. As businesses grapple with heightened risks and obligations, the need for proactive compliance strategies is more urgent than ever.

Marcus Zeltzer, Founder and Managing Director of Yellow Canary, expressed concern over the widespread uncertainty regarding pay compliance. He pointed out that companies failing to address gaps in compliance could face serious repercussions under the new laws.

Employers who intentionally underpay their employees now face severe consequences, including criminal sanctions and fines reaching up to $1,565,000 for individuals, and the higher of $7,825,000 or three times the underpayment amount for corporations.

“For too many businesses, compliance remains a reactive task rather than a proactive responsibility,” he said. “The shift toward embedding a compliance-first culture is critical to prevent future underpayment and the penalties that come with them.”

Zeltzer warns that payroll errors are rarely sudden; they build over time from systemic issues left unaddressed. Underpayments typically amount to 1 to 3 per cent of total payroll —signaling a persistent need for improvement.

Yellow Canary’s research also indicates that 56 per cent of businesses already use payroll auditing technology, and 22 per cent intend to adopt proactive compliance tools in 2025. Yet, Zeltzer emphasised that improving compliance lies in the holistic management of people, processes and platforms.

“Payroll accuracy depends on human resources, legal, technology, and workforce planning working together. Prioritising regular payroll audits, leveraging advanced compliance technology for greater transparency, and fostering cross-functional collaboration can help to adapt to evolving laws.”

Despite the challenges, Zeltzer sees the beginnings of a broader cultural shift. The report shows that 22 per cent of businesses have already identified and are addressing underpayment issues.

He concluded, "As an employer, you have two primary responsibilities regarding your employees: you have to keep them safe, and you have to pay them correctly. Over the last 40 years we have seen an evolution of workplace culture to consider employee safety constantly, and we are now seeing the start 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