Payroll remediation guide: from underpayment findings to employee payment

What does payroll remediation involve?

Payroll remediation brings together the work needed to establish an underpayment, correct the employee outcome and resolve the conditions that caused it. For HR, Finance and Payroll leaders, the challenge is keeping those workstreams connected.

An employee may have a clear payment discrepancy while the programme still has unanswered questions: did the same issue affect other roles? Was a rule configured incorrectly? Were working hours missing from an interface? Who can approve a change to the calculation approach?

The Fair Work Ombudsman’s Payroll Remediation Program Guide, pages 2–5, describes an employee-centred approach scaled to the issue and the organisation. It also recognises that stages can overlap or need revisiting as evidence develops.

Use this guide to organise that work. Detailed entitlement, legal and tax decisions need advice appropriate to the relevant instruments, periods and circumstances.

What should happen when a potential underpayment is found?

Assign an accountable owner, preserve the evidence and establish whether the problem could still be affecting current pay. Keep a clear distinction between what is known, what is suspected and what needs specialist assessment.

Start with a short issue record:

• The observation: the specific discrepancy, complaint or review finding.
• The evidence: the records, systems, employees and periods examined so far.
• Potential reach: other groups, sites, rules or periods that could share the issue.
• Immediate action: steps to protect records and address ongoing incorrect pay.
• The next decision: who must decide what, using which evidence.

Record exclusions as carefully as inclusions. A clean result for one sample does not by itself establish that every other employee group is unaffected. Fair Work discusses discovery, diagnosis and scope in pages 6–8 of its guide.

Use the 24-point payroll remediation checklist to assign owners, record evidence and track outstanding actions. It includes an editable spreadsheet tracker.

How do you turn the findings into a manageable programme?

Give each workstream an owner, a decision to reach and evidence needed to reach it. The following programme map is a TPS planning example; adapt it to your circumstances rather than treating it as a regulatory checklist.

HR may coordinate employee engagement; Finance may oversee funding and reconciliation; Payroll may manage payment execution; system owners may implement configuration fixes. Those are example allocations, not universal role descriptions. Name the people with actual authority in your organisation.

Rebecca’s practitioner input highlights the importance of programme management around calculation providers: defining dependencies, resolving decisions and making sure a result can move all the way through to payment.

How do you find and fix the underpayment driver?

Trace the discrepancy back through the data, rules, policies and processes that produced it. A payment adjustment corrects an outcome; identifying the driver tells you what needs to change for future pay.

Rebecca describes four useful investigation areas: system configuration, process, policy and data. A single discrepancy can involve several of them. For example, a missing allowance might involve incomplete data, an incorrect mapping and an exception report nobody owns.

Build the corrective action around the demonstrated cause. Record who will make the change, how it will be tested and how the team will detect recurrence. Read the worked example in finding and fixing payroll underpayment drivers.

How should remediation results be validated?

Validation should test whether the results follow the agreed methodology using the right data, and whether exceptions have been resolved or escalated. A calculation completing successfully is one checkpoint; the evidence supporting its inputs and outputs matters too.

Agree the strategy before reviewing the final output. Include coverage of relevant employee groups, time periods, instruments and unusual scenarios. Keep expected results, actual results and the reason for each difference together.

Where software is used, separate the provider’s calculation responsibilities from the employer’s decisions and the agreed validation work. TPS can help develop that strategy and investigate the results. Our remediation validation guide includes a planning worksheet and a practical example.

What if the period has already been remediated?

A second review needs an explicit reconciliation method. Establish the revised entitlement and how valid earlier payments relate to it before deciding the remaining amount to pay.

Keep these concepts separate: gross entitlement, previous remediation payments, any residual entitlement, tax withholding, employee cash payment, superannuation and interest. The word “net” can refer to different things; define it in the methodology and reports.

The Coles and Woolworths decisions make contractual offsetting an important review topic. Fair Work’s explanation says excess pay in one period generally cannot satisfy a shortfall in another under contractual offsetting. It separately discusses annualised wage arrangements under awards and agreements. Assess the arrangement and current legal position with advisers rather than assuming every prior remediation needs the same change.

How do results become an employee payment?

Plan the employee journey alongside the calculation work. Employees need understandable information, a way to raise questions and a reliable route to receiving what is owed.

Use the employee communications and payment journey guide to plan stage-by-stage updates, portal handoffs, review requests and payment follow-up.

For a programme using a portal, define how employees recognise a genuine communication, confirm their details, obtain help and see what happens next. Include an alternative process for people who cannot use the portal, and a plan for contacting former employees.

Before a payment batch is released, clarify:

1. Who confirms the authorised employee population and approved amounts.
2. How banking and super details are validated and exceptions resolved.
3. Who approves the relevant tax, super, interest and STP reporting treatment.
4. How Payroll receives and checks the payment instructions.
5. How completed, failed and outstanding payments are reconciled and followed up.

Avoid making employee communication depend on every calculation being complete. Fair Work’s guide addresses ongoing communication and review channels in pages 18–24. Confirming payment details should not be presented as waiving an employee’s rights.

When is a remediation programme ready to close?

Closure needs evidence of completed work, clear ownership of anything outstanding and effective corrective action. A completed payment run alone does not show that the original driver has been resolved.

Use a closure discussion to ask:

• Can the team explain the approved scope and all significant changes to it?
• Are calculation and payment exceptions resolved, or assigned with a documented next step?
• Do payment records and relevant reporting reconcile to the approved outcomes?
• Can employees still raise questions or request review?
• Have corrective changes been tested, with ongoing controls assigned to named owners?

Fair Work covers corrective measures and future compliance in pages 27–31. Use the programme’s lessons to improve responsibilities, training and assurance across the teams that influence pay.

What is the next useful step for your team?

Bring one current finding to a working session with the relevant HR, Finance, Payroll and system owners. Agree the evidence still needed, the next decision and the person responsible for it. That creates a concrete starting point even when the full programme scope is still developing.

If your immediate problem is understanding a variance, start with the root-cause guide. If the results already exist and you need confidence in them, use the validation guide.

Where can your team get remediation support?

If your team needs help turning these checks into a working program, explore our payroll remediation support. We can discuss root-cause investigation, program management, validation, reconciliation and the employee-payment journey, with responsibilities agreed around your existing providers and advisers.

Sources and scope

This guide combines practitioner input supplied by Rebecca Wade with the Fair Work Ombudsman’s Payroll Remediation Program Guide and its offsetting and record-keeping guidance. The programme map and working questions are TPS editorial tools, not FWO-prescribed forms. Examples do not describe a client engagement.

Portions adapt the Payroll Remediation Program Guide, April 2025. © Fair Work Ombudsman, www.fairwork.gov.au, licensed under CC BY 3.0 Australia. Guidance has been condensed and combined with original commentary and planning tools. No FWO endorsement is implied.