With the end of the financial year (EOFY) upon us, businesses will be frantically getting their finances in order—but they should also prioritise optimising their compliance frameworks and payroll systems. Just this month, Griffith University experienced the severe consequences of outdated payroll systems and poor data management, when they were forced to backpay $8.1 million to 5,400 underpaid staff (Kearns, 2025).
And it’s not an isolated issue, they’re the sixth university to do so since 2022, with Fair Work cracking down on Latrobe University, The University of Sydney, and The University of Newcastle, amongst others—and that’s just within the higher education sector (Kearns, 2025).
The financial and reputational risks that come with inadequate systems have reached a critical level, making payroll compliance an essential consideration as businesses move into FY26.
Griffith University: A Case Study in Payroll Failures
Many businesses across Australia—whether in education, hospitality, or other sectors—face similar risks as Griffith University. According to reports, the issue at Griffith was linked to outdated software that could not properly track hours worked by casual staff, which resulted in a series of errors that went unnoticed for years (Kearns, 2025).
Griffith University’s Vice Chancellor, Professor Carolyn Evans, has acknowledged the errors, stating that, “This was not intentional, but it was a significant failure in terms of our systems and internal processes” (ABC News, 2025). The university now faces not only the financial burden of $8.1 million in backpay, but also the reputational damage that comes with the public knowledge of their oversight.
The Rising Legal Risks for Employers
Griffith University’s payroll failure occurred against the backdrop of 2025’s stricter wage theft laws. These reforms make intentional underpayment of workers a criminal offence under the Fair Work Legislation Amendment (Closing Loopholes) Act 2023. As of January 1st, employers found guilty of deliberately underpaying workers face fines up to $1.65 million, with the people involved at risk of up to 10 years in prison (Schreier-Joffe & Tolkin, 2025).
This legislative shift is part of a broader crackdown on wage theft, particularly for vulnerable workers. As highlighted by the Australian Payroll Association, the government is focusing on businesses that exploit workers through underpayment or misclassification of employee entitlements (Australian Payroll Association, 2025). And the Fair Work Ombudsman (FWO) has also ramped up investigations, targeting industries with higher risks of non-compliance, such as hospitality and retail (Box, 2025). In Melbourne, surprise visits to 40 businesses in the hospitality sector led to millions of dollars in recovered wages (Sarwal, 2025).
Compliance Failures Also a Reputational Risk
The immediate cost of payroll errors often comes in the form of reputational damage. In the case of Griffith University, there was significant media attention and public outcry surrounding the underpayment of thousands of staff—reflecting the growing scrutiny around wage practices in the workplace.
The government has made it clear that businesses must be proactive in complying with wage laws, or they risk serious penalties. In the wake of the Griffith University case, the government is expected to place even greater emphasis on ensuring institutions across all sectors are fully compliant with wage laws (ABC News, 2025).
What Employers Can Do to Avoid Payroll Errors
To avoid costly errors and legal penalties, employers should follow these key steps:
- Invest in modern payroll systems: Outdated systems are one of the most common causes of payroll errors. Employers should ensure they are using reliable payroll systems that comply with current regulations and accurately track employee hours.
- Conduct regular audits: Payroll audits must not be an afterthought. Businesses should regularly audit their payroll processes to identify any discrepancies.
- Provide ongoing staff training: Payroll staff must be well-versed in the latest wage laws and regulations. One of the main causes of payroll failures is a lack of understanding around the legal requirements.
- Self-report errors: If mistakes are found, businesses should self-report to the Fair Work Ombudsman as soon as possible. Self-reporting can help businesses avoid severe penalties, especially if they cooperate with investigations.
- Stay informed about legal changes: The introduction of new wage theft laws and other legislative reforms means businesses must stay up to date. Regularly consulting with payroll professionals and legal advisors can help ensure compliance.
(Fair Work Ombudsman, 2025)
Griffith Case Highlights the Severe Consequences of Neglecting Payroll Compliance
With $8.1 million owed to staff and the potential for ongoing reputational damage, the university’s experience underscores the importance of maintaining up-to-date payroll systems and compliance processes. As wage theft laws become stricter, businesses across Australia—regardless of size—must prioritise compliance to avoid severe penalties, financial loss, and reputational harm.
CVCheck can help protect both your reputation and your bottom line, with workforce compliance solutions that modernise and simplify your payroll systems.
References
Australian Payroll Association. (2025). What employers and payroll managers need to know about Australia’s new wage theft laws. https://www.austpayroll.com.au/what-employers-and-payroll-managers-need-to-know-about-australias-new-wage-theft-laws
Box, C. (2025, May 24). Fair Work Ombudsman cracks down on wage theft in the hospitality sector. Business News Australia. https://www.businessnewsaustralia.com/articles/fair-work-ombudsman-cracks-down-on-wage-theft
Fair Work Ombudsman. (2025). Self-reporting and cooperating with Fair Work Ombudsman. https://www.fairwork.gov.au
Kearns, B. (2025, June 12). Griffith University commits to pay back more than $8m to underpaid staff. News.com.au. https://www.news.com.au/finance/work/at-work/griffith-university-commits-to-pay-back-more-than-8m-to-underpaid-staff/news-story/11c3b8f34fd65c65f568961ed9025d51
Schreier-Joffe, M., & Tolkin, R. (2025). Fair Work Legislation Amendment (Closing Loopholes) Act 2023: Wage theft laws and penalties. Australian Law Review, 34(2), 45-67.
Sarwal, K. (2025, February 10). Fair Work audits hospitality businesses for wage compliance. Australian Financial Review. https://www.afr.com/news/fair-work-audits-hospitality-businesses
