20 February 2024

What Happens if Payroll Is Done Late?

a photo of a man holding a calculator for payroll

Did you know that late payroll processing can have significant repercussions on both employers AND the employees who are being paid late? Not only does delayed payment diminish employee satisfaction, but it also triggers a chain reaction of adverse impacts, including operational integrity, financial stability, erosion of a trust culture, and non-compliance. This article by the expert Outsourced Payroll team at Dexterous Group aims to help employers understand and mitigate these impacts and safeguard the integrity and success of their enterprises.

1. The Financial Consequences of Late Payroll:

For businesses who regularly pay their team late, it impacts the financial stability for both employees and employers, posing challenges to operations and employee satisfaction. Financial stress resulting from even slightly delayed payments can impair employee performance and morale, compromising overall productivity and business continuity. Payroll processing delays also create a ripple effect across various payroll-related obligations such as superannuation contributions and payroll tax payments, exposing compliance issues and financial strain.

2. Workplace Culture Consequences of Late Payroll:

Beyond the financial consequences, late payroll diminishes trust between employers and employees. Timely payment is not only crucial for financial stability but also serves as a measure of employee value within the organisation. Feelings of neglect and a lack of professionalism lead to reduced job satisfaction, productivity, and ultimately, talent flight. Cultivating a culture of punctual payment is essential to preserve employee well-being and organisational cohesion. Dexterous Group offer HR services in Sydney if you need advice that encompasses both Finance and HR.

3. Operational Consequences of Late Payroll:

No matter what industry you’re in, delaying payroll can slow the operations of even a thriving business. Late payroll can slow employee productivity and silently reduce their pride in work, until it’s too late to reverse the damage, putting companies under threat of existence. For many service-based companies that bill based on time, delayed timesheets and payroll can delay the ability to invoice for work completed.

Run your payroll on time and employees will be content, feel respected, and continue to perform at their optimal level.

4. Legal Consequences of Late Payroll:

Non-compliance with payroll obligations invites scrutiny from regulatory bodies such as the Fair Work Ombudsman and the Australian Taxation Office (ATO), resulting in additional operational hurdles and potential penalties. If your organisation needs Payroll support to check you are satisfying Payroll compliance and payroll law in Australia, contact Dexterous Group as soon as possible.

If your team is consistently late in lodging payroll, it is likely that other payroll-related lodgements, such as superannuation, payroll tax, and workers’ compensation declarations, may also be delayed. Below are several legal ramifications associated with late payment of payroll-related lodgements.

  1. Penalties and legal proceedings for late SGC:
    Timely remittance of Superannuation Guarantee (SG) Contributions is mandated by the Australian government. Late or omitted payments incur penalties under the Fair Work Act 2009 and regulations established by the ATO.
  2. Interest and penalty tax to the NSW Government: The Payroll Tax Act 2007 in NSW prescribes interest and penalty taxes for delayed payments, ranging from 25% to 75% or further serious interest and penalties.
  3. ATO Audits for late lodgements: Penalties are enforced for non-compliance with tax obligations, with ATO audits likely triggered by discrepancies or changes in taxpayer circumstances. The Australian Taxation Office audits, subject organisations to heightened scrutiny and potential penalties.

A Strategic Solution to Late Payroll: Embracing Outsourced Payroll Management

The ramifications of late payroll processing in Australia are severe and multifaceted. By integrating insights from payroll experts, employers can navigate the complexities of payroll management and uphold their legal obligations to employees, ensuring a productive and compliant workplace environment.

To mitigate the risks associated with late payroll processing, leveraging outsourced payroll management is the optimal approach. Dexterous offers comprehensive finance services, administered by seasoned accountants and finance professionals, facilitating seamless integration with your business to streamline financial operations and ensure efficiency and compliance. For tailored solutions to your payroll needs, contact Dexterous. We’ve revolutionised the way business finance departments are built and managed, ensuring they operate at their best, reliably.