A staff member says they think they have been underpaid. Or worse, you discover it yourself while reviewing rosters, overtime, allowances or an outdated pay setup. At that point, the question is not just can HR help with underpayments – it is how quickly the issue can be contained, corrected and prevented from turning into a much larger compliance problem.
For Australian businesses, underpayments are rarely just a payroll issue. They often sit at the intersection of awards, classifications, contracts, hours of work, record-keeping and manager decisions made on the run. That is exactly where experienced HR support becomes valuable. HR may not be the team physically processing payroll, but it often plays a central role in finding the cause, assessing the risk and helping the business respond properly.
Can HR help with underpayments in a practical way?
Yes, provided HR has the right level of expertise and understands the industrial relations side of the issue. In many SMEs, underpayments happen because no one person is looking across the full picture. Payroll may be following a system setup. Finance may be working from budgets. Managers may be approving hours without understanding award implications. Business owners may assume salaried staff are covered when they are not.
HR brings those moving parts together. A commercially minded HR adviser can review employment arrangements, check whether the correct award or agreement has been applied, test classifications, look at overtime and penalty assumptions, and assess whether contracts line up with actual work performed. That is the difference between a quick patch and a proper fix.
Just as importantly, HR helps the business manage the response. If an underpayment is identified, there are employee communication issues, remediation planning, record reviews and process changes to work through. Getting that wrong can create distrust internally and attract avoidable scrutiny externally.
Where underpayments usually start
Underpayments are not always caused by deliberate conduct. Often, they grow out of small errors that sit unnoticed for months or years.
A common example is award coverage. A business may assume an employee is award-free because they are salaried or because the role sounds managerial. In practice, the employee may still be covered by a modern award, and their salary may not be enough to offset minimum entitlements such as overtime, weekend penalties, allowances or loadings.
Classification errors are another frequent problem. Two employees can have similar job titles but different duties, and those duties matter. If the classification is too low, the minimum pay rate may be wrong from the start.
Then there are time and attendance issues. Missed meal breaks, regular early starts, travel time, broken shifts and work performed outside rostered hours can all affect pay obligations. In sectors such as hospitality, retail, trades and healthcare, these issues are especially common because work patterns are less predictable and managers are often focused on operations first.
What HR should review first
When the question is can HR help with underpayments, the real value lies in knowing where to look first. A capable HR adviser will usually start by clarifying the workforce profile. Which employees are potentially affected? Are they permanent, casual or part-time? What awards, contracts or enterprise arrangements apply?
From there, the review typically moves to the underlying documents and practices. That includes employment contracts, position descriptions, pay rates, classifications, rosters, timesheets and payroll reports. It also means looking at what happens in reality, not just what is written down. If a contract says ordinary hours are 38 per week but employees routinely work 45 without proper reconciliation, that gap matters.
HR should also test whether annualised salary arrangements have been set up correctly. Many businesses believe a salary solves award complexity. It can, but only if the salary is high enough and the arrangement is structured and monitored properly. If not, the business can still be exposed.
HR and payroll are not the same thing
This is where many businesses get caught. Payroll systems process data. They do not always tell you whether the inputs are legally correct.
A payroll officer may process the rates they have been given. A bookkeeper may run wages exactly as the software is configured. Neither function necessarily checks award interpretation, classification levels, contract enforceability or whether managers are requiring work outside paid hours. HR fills that compliance and people management gap.
That does not mean HR works alone. The strongest approach is usually collaborative. Payroll provides data. Finance helps quantify exposure. Legal advice may be needed in higher-risk matters. HR coordinates the employment side, interprets the practical impact and helps shape a response the business can actually implement.
Can HR help with underpayments before Fair Work becomes involved?
Often, yes. Early intervention matters.
If a business identifies a potential issue and acts quickly, HR can help scope the problem, arrange a payroll audit, calculate likely exposure and develop a remediation plan. That may include back payments, superannuation adjustments, updated contracts, revised classifications and changes to rostering or approval practices.
HR can also help prepare communications to affected employees. This part is often underestimated. Employees want clear answers: what happened, who is affected, how the business is fixing it and when payments will be made. A vague or defensive message usually makes things worse.
Where the issue is serious, widespread or long-running, the business may need specialist workplace relations or legal support as well. HR should recognise that threshold quickly. Good HR advice is not about pretending every problem can be handled internally. It is about getting the right level of response before risk escalates.
What a good remediation process looks like
A sensible response is methodical. First, stop the problem continuing. That may mean correcting pay settings immediately, changing classifications, or adjusting roster and approval practices.
Next, work out the scope. Which employees are affected, over what period, and by which pay elements? Base rates are only part of the picture. Penalties, overtime, allowances, leave loading and superannuation may all need review.
Then calculate and document the remediation clearly. Employees should be able to understand how the business arrived at the figure. Internally, the business needs records showing what was reviewed, what assumptions were made and what changes were implemented.
Finally, fix the system that allowed the issue to happen. If the business only repays underpayments but leaves the same award confusion, weak approvals or outdated contracts in place, it is likely to happen again.
Why SMEs need practical HR support here
For small and medium-sized businesses, underpayment issues can quickly become disproportionate. The direct cost is one part of the problem. There is also management time, employee confidence, possible complaints, reputational damage and pressure on day-to-day operations.
Most SMEs do not need a full internal HR team to deal with this, but they do need experienced advice. That is especially true when the business has grown quickly, inherited poor documentation, moved between payroll systems or relied on informal practices that no longer hold up.
This is where outsourced HR support can make a real difference. An experienced adviser can step in, assess the risk, coordinate the review and help the business make practical changes without creating unnecessary disruption. For many employers, that is the fastest path to control and clarity.
What HR can do after the immediate issue is fixed
The best HR support does not stop at repayment.
Once the immediate risk is contained, HR should help strengthen the business against repeat issues. That may involve reviewing award coverage across the workforce, updating contracts, tightening position descriptions, improving manager training and checking whether payroll processes reflect actual working arrangements.
It can also mean setting better governance around pay decisions. For example, who approves classification changes? Who checks salary absorption assumptions? How often are payroll settings reviewed against awards? Those are not theoretical questions. They are the controls that reduce the chance of another problem surfacing six months later.
For businesses that want ongoing support, firms such as The HR Department Consulting Group can provide senior HR guidance without the overhead of hiring in-house. That is often the right fit when the business needs responsive compliance support but not a permanent HR headcount.
The honest answer
So, can HR help with underpayments? Yes – and in many cases HR should be involved early. But the quality of that help matters. General admin support is not enough if the issue involves awards, classifications, salary offsets or long-running payroll practices.
The right HR support gives you more than a box-ticking exercise. It helps you understand what has gone wrong, what your risk looks like, how to communicate with employees and how to fix the underlying process in a way that works commercially as well as legally.
If there is even a hint that employees may not have been paid correctly, the safest move is to treat it as both a compliance issue and an operational one. The sooner you get clear advice, the more options you usually have – and the easier it is to put things right properly.