Wage Audits: A Key to Payroll Compliance forAustralian Businesses

Introduction

Wage audits have become essential for Australian businesses navigating a complex and evolving regulatory environment. With increased scrutiny from the Fair Work Ombudsman (FWO), media attention, and even criminal penalties for intentional underpayments starting in 2025, proactive wage auditing is more than just good practice—it’s critical.

What is a Wage Audit?  

A wage audit is a detailed review of your payroll data and employee records to ensure that each worker is being paid correctly under relevant awards, enterprise agreements, or contracts. It includes verifying hourly rates, overtime, superannuation, leave entitlements, and any additional allowances.

Wage audits can be internal or external, and they’re best conducted regularly—annually or semi-annually, depending on business size and complexity.

Why Wage Audits Matter in 2025

Increased enforcement activity, growing employee awareness, and new wage theft laws mean businesses are now under the microscope. A missed payroll error isn’t just an inconvenience—it can be reputationally and financially devastating.

Firms that don’t audit run the risk of:

• Cumulative underpayments over years
• Legal action and media exposure
• Damaged trust with employees
• Fines, back pay orders, and possibly criminal prosecution

Common Mistakes Caught in Wage Audits

Even businesses with good intentions make payroll mistakes.Some of the most common include:

• Misclassifying employees under incorrect award levels
• Failing to apply overtime or weekend penalty rates
• Missing superannuation on bonuses or leave loading
• Paying flat hourly rates that fall below award minimums

Many of these are due to complex modern awards, changing entitlements, or outdated systems.

With the introduction of national wage theft laws in 2025, employers who intentionally underpay workers could now face criminal charges—including multi-million-dollar fines or even jail time for directors.This shift has prompted a rise in legal-led wage audits under privilege, where law firms audit payroll data on behalf of businesses to identify and rectify risks confidentially.

How to Conduct a Wage Audit

1. Gather Data – Pull all payroll records, employee classifications, timesheets, and rosters.
2. Check Against Awards – Compare rates paid vs what’s legally required under awards or agreements.
3. Flag Issues – Look for unpaid overtime, allowances, or incorrect loadings.
4. Rectify Errors – Pay back employees and document corrections.
5. Update Systems – Ensure your payroll system reflects correct awards and rules.
6. Repeat  Regularly – Make audits part of your compliance cycle.

 Leveraging Subi for Compliance

Subi is a purpose-built wage audit and compliance platform used by leading law firms and businesses to conduct wage audits more efficiently. It automates much of the comparison process and provides a structured, defensible approach for legal and HR teams.

Final Word

In 2025, a wage audit is no longer optional. It’s your front line defence against risk. Conducting audits regularly—and using platforms like Subi to do so—ensures you stay compliant, build trust, and avoid ending upin headlines.

Conclusion

Legal technology is a game-changer in payroll compliance, ensuring businesses stay ahead of regulations and prevent wage theft. By leveraging automated payroll systems like Subi, employers can minimise risks and maintain a transparent, compliant payroll process.