A payroll review provides an opportunity to look at your organisation’s employment arrangements, pay calculations and everyday payroll processes together. It helps you check that employees are being paid correctly and identify where your systems or processes need attention. Agreeing the scope at the outset helps everyone understand what will be checked and what the findings can establish.
Start with a clear scope
The scope should identify the employees and pay periods to be reviewed, the questions to be answered and any areas requiring closer attention. Sampling can help identify patterns, although findings remain limited to the records examined and may indicate a need for a broader review.
Relevant records will usually include employment contracts, position descriptions, applicable awards or enterprise agreements, payroll reports, timesheets, leave records and superannuation payment information. Any gaps should be documented so it is clear where missing information affects the conclusions.
Check coverage and classifications
Confirm which workplace laws, awards or agreements apply, including the National Employment Standards where relevant. Then check each employee’s employment status and whether their payroll classification reflects the work they actually do.
When assessing a classification, compare the position description and work performed with the criteria in the applicable award or agreement. Duties, qualifications, experience and responsibility may all be relevant, depending on the classification structure.
Check that pay increases and any required progression have been applied from the correct dates, using the rates that applied during each period being reviewed.
Follow the hours through to payment
Trace the hours worked through to the amount paid, including how roster changes and timesheet corrections reach the payroll team. Depending on the applicable award or agreement, this may involve overtime, penalty rates, allowances, casual loading, minimum engagements and payments associated with breaks.
For employees paid an annualised wage or contractual salary, check the arrangement and the entitlements it is intended to cover. Some award annualised wage provisions require particular time records and reconciliations. Contractual salary arrangements also need careful review to establish whether minimum entitlements have been met for the work performed.
Review leave and superannuation
Check that leave accruals, leave taken and remaining balances reconcile, and that leave payments reflect the employee’s entitlements. Include annual leave loading and unused annual leave paid on termination where applicable, along with any balances carried over from an earlier payroll system.
For superannuation, check eligibility, the applicable rate, the earnings used in calculations and evidence that contributions reached the correct fund on time. Review how rejected contributions are followed up and resolved. Use Australian Taxation Office guidance to check the requirements for each period under review, as calculation and payment rules can change.
Look at records and everyday processes
For the majority of Australian employers, time and wage records must be kept for seven years and pay slips must be provided within one working day of payment. Check that records contain the required information, are accessible to those entitled to see them and show when and why corrections were made.
The review should also examine who can change payroll settings and how those changes are checked before a pay run is approved. This includes reviewing deductions and their lawful basis, along with how employee pay queries are handled. Understanding these processes can help identify how errors arise and where improvements are needed.
Act on the findings
The review should explain the evidence behind each finding and identify any gaps or questions that need further advice. Where an underpayment is found, address it promptly and check whether other employees or earlier pay periods may also be affected.
An action plan should set out who will make the necessary changes, when they will be completed and how their effectiveness will be checked in later pay runs. The response will depend on the findings and the awards, agreements and employment arrangements involved.
At The BelRose Group, we provide payroll support and award interpretation, starting with an understanding of your organisation’s requirements and systems. If you are considering a payroll review, we would welcome a conversation about your current arrangements and the areas you would like us to look at.