Payroll Accuracy
Payroll Rounding: A Hidden Underpayment Risk Most Businesses Are Missing
Lately, we’ve noticed a lot of payroll audits uncovering issues with how employee hours are rounded.
It might look harmless on paper, but in reality, it’s becoming a bigger Fair Work risk.
Here’s what’s really happening:
Rounding down employee hours is not compliantIf an employee works until 4:14pm, you can’t just pay them to 4:00pm.
Employees must be paid for ALL time workedThat includes:
- Starting early
- Finishing late
- Training, meetings, prep time
Even small amounts matter. Those minutes add up over weeks, months, and across your whole team.
Where businesses are getting caught out
We commonly see issues like:
- ⛔ Timesheets rounded to 15-minute blocks
- ⛔ “Rostered hours” paid instead of actual clocked time
- ⛔ Systems automatically rounding down without review
- ⛔ Small minutes are consistently lost each shift
On their own, these issues might seem minor.
But together, they can lead to ongoing underpayment.
But together, they can lead to ongoing underpayment.
Best practice (and what we recommend to clients)
To stay compliant and ready for audits:
- ✔️ Pay to the actual minute worked
- ✔️ Keep raw clock-in/clock-out records
- ✔️ Avoid rounding down entirely
- ✔️ If you do round, make sure it never puts employees at a disadvantage
- ✔️ Regularly audit payroll vs timesheets
Here’s the main point to remember
This isn’t just about a few minutes here and there.
It’s about:
- Accurate record keeping
- Paying employees correctly
- Avoiding backpay claims and penalties
Right now, payroll accuracy is getting a lot of attention.
Need Help?
If you’re not sure your payroll setup is compliant, now’s a good time to check.