Wages not paid on time

You can negotiate with employees on things like start and finish times, flexible hours and remote working arrangements, bonuses or pay reviews, and a range of non-salary benefits

One thing that isn’t negotiable, is meeting your pay obligations.

When and how employees must be paid can depend on the applicable modern award, enterprise agreement and employment contract. For example, a modern award may require employees to be paid weekly or fortnightly. Failing to meet these requirements may constitute a breach of your workplace obligations.

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Employer obligations

Under the Fair Work Act, employers must pay employees their wages and entitlements in full and at least monthly. Additional payment requirements may apply under a modern award or enterprise agreement.

Failing to pay employees correctly or on time may breach the Fair Work Act, an applicable modern award or enterprise agreement, and/or the employee’s employment contract. Beyond the legal risks, late payments can damage employee trust, affect morale and disrupt productivity.

Even an isolated late payment should be taken seriously. If a payment is missed or delayed, employers should rectify any outstanding wages or entitlements as soon as possible and take steps to prevent the issue from happening again.

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Superannuation contributions and the ATO

From 1 July 2026, Payday Super changed when employers must pay super guarantee contributions. Instead of paying super quarterly, employers must make contributions for each payday, whether employees are paid weekly, fortnightly or monthly.

An employee’s super guarantee contribution must generally be received by their super fund within seven business days after payday, with sufficient information for the contribution to be allocated to their account. Limited exceptions apply, including extended timeframes in some circumstances. This means the previous quarterly payment cycle no longer applies to earnings paid from 1 July 2026.

If you don’t pay the minimum super guarantee in full and on time, you may become liable for the Superannuation Guarantee Charge (SGC). Under Payday Super, the SGC can include any remaining unpaid super, notional earnings and an administrative uplift amount.

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The administrative uplift starts at 60% of the unpaid super and notional earnings, although it may be reduced depending on factors including your compliance history and whether you make a voluntary disclosure. Late contributions can also reduce the outstanding super shortfall used to calculate the SGC.

If you miss or make an incorrect super payment, you should correct it as soon as possible. For 2026 – 27, the Australian Taxation Office has stated it is taking a supportive compliance approach to employers that are genuinely trying to comply and quickly fixing errors.

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Wage theft and potential legal consequences

From 1 January 2025, intentionally underpaying an employee’s wages or entitlements can be a criminal offence under the Fair Work Act. This can include deliberately failing to pay amounts such as minimum wages, penalty rates, overtime, allowances and certain other entitlements when they are due. The offence can also apply to certain superannuation contributions, although exceptions apply.

Importantly, honest mistakes are not criminal offences under these laws. However, an unintentional underpayment may still amount to a civil contravention and should be identified and rectified promptly.

It’s important to understand your workplace obligations and have appropriate payroll processes in place to help ensure employees receive their correct wages and entitlements.

Where an employer intentionally fails to pay an employee an amount, they are required to pay on or before the date it is due, the conduct may constitute a criminal offence. The Fair Work Ombudsman can investigate suspected criminal underpayments and refer suitable matters for possible prosecution. A conviction can result in significant fines, imprisonment or both.

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Penalties for late tax payments

When processing payroll, employers are generally required to withhold employee income tax and report and pay these amounts to the Australian Taxation Office (ATO) by the applicable deadline.

Lodging a Business Activity Statement (BAS) or Instalment Activity Statement (IAS) late may result in a Failure to Lodge penalty. Penalties can increase the longer a reporting obligation remains outstanding, with higher penalties potentially applying to larger entities.

If amounts owed to the ATO aren’t paid by the due date, a General Interest Charge (GIC) may also apply. This is calculated daily on a compounding basis, meaning the amount owed can continue to grow for every day it remains unpaid.

Depending on the circumstances, businesses may also face additional penalties or debt recovery action, making it important to keep payroll-related tax reporting and payments on track.

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Authorised, mandatory and voluntary deductions

Employers can only make deductions from an employee’s pay in certain circumstances. A deduction may be permitted where the employee has authorised it in writing and it is principally for their benefit, or where it is authorised by law, a court or Fair Work Commission order, an applicable modern award or registered agreement.

Employee-authorised deductions can be one-off or ongoing and may include:

Salary sacrifice arrangements.
Voluntary superannuation contributions.
Union or professional association fees.
Health fund payments.
Other deductions authorised by the employee that are principally for their benefit.

Other deductions may be required or authorised by law or an order, such as certain child support deductions or court-ordered payments.

It’s important that deductions are properly recorded and included on the employee’s pay slip where required. Employers must provide employees with a pay slip for each payment of wages and comply with the Fair Work Act and Fair Work Regulations record-keeping requirements.

Employees can also withdraw their authorisation for certain voluntary deductions. Employers should ensure any changes are documented appropriately and reflected in payroll as required.

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Erosion of employee trust

Something that could be even more costly than the financial penalties for late wages payments is the loss of employee trust and engagement.

Employees need to pay their mortgage, rent, childcare fees, utilities, groceries, and other debits. A single late pay can result in missed bill payments that could incur a late payment fee, genuine financial hardship, particularly for lower-paid workers, and impact their credit rating.

Payroll errors and late payments are common reasons why employees choose to resign. If you factor in recruitment time, onboarding, training, lost productivity, and loss of knowledge, the cost of replacing an experienced employee could be 50% to 200% of their annual salary.

If you’re unsure about employee wages, the latest modern award or enterprise agreement, employee entitlements, and don’t want to make the mistake of paying your employees incorrectly, call Peninsula 24/7 for free initial specialist advice.

Call now 1300 838 427

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This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.

You can negotiate with employees on things like start and finish times, flexible hours and remote working arrangements, bonuses or pay reviews, and a range of non-salary benefits

One thing that isn’t negotiable, is meeting your pay obligations.