Payroll Compliance for Victorian Employers: Which Rules Are Federal and Which Are Victoria's

Payroll compliance in Victoria means satisfying two systems at once. The rules that decide what you pay someone, including awards, minimum wages, leave, termination and pay slips, are federal. They are set by the Fair Work Act and administered nationally, alongside the ATO’s tax and superannuation obligations. Victoria adds its own requirements for payroll tax, WorkCover insurance, long service leave, portable long service benefits, labour hire licensing and child employment. Getting the first layer right does not cover you for the second.

This article contains general information only and isn’t personal financial or workplace relations advice. Every business is different, so speak with a registered BAS agent, your accountant, or the relevant regulator before relying on it.

Why Victorian payroll compliance has two layers

Most Victorian businesses are national system employers. That means the Fair Work Act sets their employees’ core entitlements: minimum wages, award conditions, the National Employment Standards, notice and redundancy, pay slips and record-keeping. Those rules are identical whether the business trades in Bendigo or Brisbane.

What makes Victoria distinct is everything the state has kept for itself. Workers’ compensation insurance is a state scheme. Long service leave is state legislation. Payroll tax is a state tax. Labour hire licensing and child employment licensing are Victorian regimes with Victorian regulators. None of these appear in an award, and none of them will be flagged by payroll software that is doing its job correctly on the federal side.

That’s where businesses can get caught out. The pay run itself might be completely correct, with the right award, classification, penalty rates, super and STP filing, while the business is still missing a WorkCover or portable benefits registration and under-accruing long service leave under the current rules.

The federal layer is about what you pay each employee. The Victorian layer is mostly about what you register for and report to the state. The difficulty is that problems in either layer may not be obvious until a regulator, adviser or employee raises them.

Who regulates what

There isn’t one obvious place where an employer can check all of these obligations together. Each has its own registration trigger, and each measures the business differently: headcount for some, remuneration for others, and industry for others.

The federal layer: pay rates and award coverage

Award coverage and classification are the two decisions everything downstream depends on, and they’re covered in depth in our guide to reducing payroll errors and, for venues, our hospitality payroll guide.

The point worth repeating here is that rates move annually. From the first full pay period on or after 1 July 2026, award minimum wages increased by 4.75%, taking the National Minimum Wage to $1,004.90 a week or $26.44 an hour, with casuals on the National Minimum Wage entitled to at least $33.05 an hour including the 25% loading. Award rates sit separately from and generally above the National Minimum Wage, so the practical step each July is checking your rates against the current pay guide for the applicable award.

For a small, stable team, it is easy to miss the annual rate change. A business with three long-serving employees on comfortable above-award rates can go several years without checking because nobody complains and the rates still feel generous. The award floor rose each of those years, so rates that were once comfortably above it may need to be reviewed.

Superannuation: 12% and the shift to Payday Super

The superannuation guarantee rate is 12% of ordinary time earnings, having reached its legislated end point on 1 July 2025.

The bigger operational change is timing. Payday Super took effect on 1 July 2026. Contributions must be paid each payday, and the fund must receive the payment within 7 business days. The deadline is 20 business days for a new employee’s first contribution.

If that timing change has tightened your cash position, our Melbourne cash flow guide covers how to rebuild the gap it leaves.

Pay slips and record-keeping

Two Fair Work obligations are worth stating precisely. Both can be enforced by infringement notice, effectively an on-the-spot fine, rather than requiring a court process.

Employees must be given a pay slip within 1 working day of pay day, even if they’re on leave. And time and wage records must be kept for 7 years, in English and legible.

That 7-year period is longer than the ATO’s general 5-year rule for business records. This is where mistakes can happen: a business clears out records on a 5-year cycle and discards employee records that had another two years to run. Our record-keeping guide sets out which retention period applies to which document.

Rosters, incidentally, are not time records. A roster shows what was planned. A timesheet or clock-in record shows what happened, and it’s the second one that decides whether you paid correctly.

WorkCover insurance: when Victorian employers need to register

This is where Victorian-specific compliance usually starts, and the threshold is low. An employer must register for WorkCover insurance if it employs workers in Victoria and annual remuneration is more than $7,500, or is expected to be. Employing an apprentice or trainee triggers registration regardless of the amount.

It is a low threshold, and many businesses will exceed it with their first regular employee. Most businesses cross it with their first hire, well before they think of payroll as a significant part of the business.

Rateable remuneration, the figure used to calculate the premium, is broader than base wages. It includes salaries and wages, superannuation and certain other cash and non-cash benefits paid to workers before tax. A business estimating its position against base wages alone may reach the threshold earlier than expected.

Once registered, the premium calculation changes at a useful point to know about. At annual rateable remuneration of $200,000 or less, the premium is based on remuneration and the standard rate for your industry. Above $200,000, WorkSafe factors in how many claims have been lodged against your business. Your claims history can then affect what you pay, making return-to-work management a financial issue as well as a safety one.

Long service leave in Victoria: why the 7-year rule matters

Under the Long Service Leave Act 2018, the entitlement to take long service leave arises at 7 years of continuous employment, and an employee can apply for it from that day. Leave accrues at one-sixtieth of the period of continuous employment, which is about 6.1 weeks at the 7-year mark. It can be taken in periods as short as one day.

The 1992 Act it replaced required 10 years before leave could be taken. An employee who ended employment between 7 and 10 years was paid out, but couldn’t take the leave.

Three practical consequences follow:

1. Employees can access the entitlement earlier. A provision built on a 10-year assumption understates what an employee can request three years before that point.
2. Single days are allowable. Long service leave in Victoria is no longer a block of six weeks that gets negotiated around a quiet trading period. It can be taken a day at a time.
3. Continuous employment survives more interruptions than employers expect. Various forms of leave and certain business transfers don’t necessarily break continuity, so the employee’s actual service date may be earlier than the date recorded in the current payroll system.

Something we run into more than we’d like is a business changing payroll systems at year five or six. The new system is given the migration date as the employee’s “start date”, and six years later nobody can reconstruct the actual service history. The leave entitlement still runs from the original service date, so keeping the old payroll records matters.

Portable long service benefits: who needs to register

If you employ covered workers in community services, contract cleaning or security, there is a second long service scheme that operates in parallel.

Under the Long Service Benefits Portability Act 2018, workers in those industries accrue long service benefits that follow them between employers instead of resetting with each job change. Registration with the Portable Long Service Authority has been compulsory for employers with covered workers since 1 July 2019.

It brings its own reporting rhythm:

• Quarterly returns giving the Authority details of each covered worker’s service.
• A quarterly levy based on the hours worked and ordinary pay reported in that return.
• Worker registration, which happens through those quarterly returns rather than as a separate step.

This is easy to overlook because it applies only to three sectors. A cleaning contractor who has been operating for six years, doing everything else correctly, can discover the scheme through a client’s tender documents rather than through their accountant. Business Victoria’s portable long service leave page is a useful starting point for checking coverage.

Payroll tax: when it starts to apply

Payroll tax is a state tax on the employer’s total wage bill. It is separate from PAYG withholding and is paid by the employer rather than withheld from employees. In Victoria it applies once total Australian taxable wages exceed $1 million a year ($83,333 a month), at 4.85% on wages above the threshold, with a reduced rate of 1.2125% for eligible regional employers.

Because the threshold is relatively high, many employers won’t encounter payroll tax until well after they’ve dealt with WorkCover and long service leave. Grouping is the detail to watch: related businesses under common ownership or control generally share one threshold rather than getting one each, so a second entity can create a liability that neither business would have on its own.

Our guide to how payroll tax works for Victorian employers covers registration, the monthly return cycle, the 21 July annual reconciliation, contractor provisions and grouping in full.

Labour hire: what hosts need to check

Victoria’s labour hire licensing scheme places an obligation on the business using the workers, not only on the provider supplying them. Hosts must only engage licensed providers, and serious penalties apply for engaging an unlicensed one.

Checking is straightforward: search the public Labour Hire Licence Register before the worker starts. Two habits make it reliable:

• Check before the first shift, not after the first invoice.
• Re-check at renewal. A licence that was valid when the relationship started can lapse, and your normal accounts payable process may not alert you if it does.

Hosts can also be exposed to a provider’s contraventions under workplace and migration law, so this isn’t purely a licensing formality. It’s worth treating a labour hire arrangement as a supplier due-diligence item with the same seriousness as insurance certificates.

Employing under-15s in Victoria

Retail, hospitality and family businesses hire school-age staff, and Victoria licenses this specifically. An employer generally needs a child employment licence to employ someone under 15, whether the work is paid or voluntary. Employing a child without one is an offence.

The requirements are concrete:

• Apply at least 10 business days before the child is scheduled to start.
• Written parental or guardian consent before employment begins.
• Supervision by someone aged 18 or over holding a valid Victorian Working with Children clearance, unless exempt. A parent supervising their own child is one example of an exemption.
• Hour caps. During school term: a maximum of 3 hours a day and 12 hours a week. During school holidays: 6 hours a day and 30 hours a week.

There’s no fee, and one licence can cover multiple children, so the main burden is administrative. The practical issue is timing: if you’re hiring someone for the school holidays, the 10-business-day application period needs to be factored into rostering.

What changed recently

Three changes are worth knowing if your understanding of Victorian payroll compliance was formed a few years ago.

Right to disconnect reached small business. From 26 August 2025, employees of small business employers with fewer than 15 employees have the right to refuse to monitor, read or respond to contact outside working hours, unless the refusal is unreasonable. Associated entities and regular systematic casuals count towards the threshold. The rule does not prohibit contact, but it changes what an employer can reasonably expect in response. The employee choice pathway for casual conversion started for small business on the same date.

Wage theft moved to Commonwealth law. Victoria’s own wage theft offences under the Wage Theft Act 2020 have been repealed by the Wage Theft Amendment Act 2025, because the Commonwealth’s criminal underpayment offence, in force since 1 January 2025, now covers national system employers. Deliberate underpayment remains a crime; the prosecuting framework changed, not the exposure.

The regulator was renamed. Wage Inspectorate Victoria became Workforce Inspectorate Victoria on 12 December 2025. It still enforces Victorian long service leave, child employment, and owner driver and forestry contractor laws. If you’re searching for guidance and finding pages under the old name, they’re the same body.

One scheme has also ended: the Victorian Sick Pay Guarantee, which provided sick and carer’s pay to casual workers in certain occupations, ran as a pilot to 30 June 2024 and is closed. It occasionally still surfaces in older checklists.

Where Victorian employers most often come unstuck

• WorkCover registration deferred past the threshold, because $7,500 doesn’t feel like a payroll milestone and nobody flags it at the first hire.
• Long service leave provisioned on the old 10-year rule, understating a liability an employee can now reach at 7 years.
• Portable long service benefits never registered, in a business that is squarely inside one of the three covered industries.
• Rateable remuneration estimated on base wages, excluding superannuation, so the WorkCover threshold and premium tier are both understated.
• Labour hire providers engaged without a register check, on the assumption the licence is the provider’s problem.
• Employee records destroyed at 5 years, applying the ATO’s general rule to documents Fair Work requires for 7.
• Above-award rates never re-tested against the annual wage review, on the reasoning that they were comfortably above the floor when they were set.

Quick recap: the Victorian employer’s compliance checklist

• Confirm award coverage and classification for each employee against their actual duties.
• Re-check rates each July against the current pay guide after the annual wage review.
• Pay super at 12% each payday, with the fund receiving it within 7 business days.
• Issue pay slips within 1 working day and keep time and wage records for 7 years.
• Register for WorkCover once remuneration exceeds $7,500, and calculate rateable remuneration including super.
• Accrue long service leave on the 7-year rule, at one-sixtieth of continuous service.
• Check portable long service coverage if you’re in community services, contract cleaning or security, and lodge quarterly if covered.
• Monitor grouped wages against the $1 million payroll tax threshold before it’s crossed, not after.
• Search the Labour Hire Licence Register before engaging any provider, and again at renewal.
• Apply for a child employment licence at least 10 business days before anyone under 15 starts.

Getting help

Most Victorian payroll compliance problems aren’t calculation errors. They are registration gaps: a threshold was crossed, but nobody was monitoring it. A short review of which of the eight obligations applies to your business is usually a better starting point than changing the next pay run.

If you’d like that handled on an ongoing basis, see our payroll services and bookkeeping services. If you suspect an error has already been running for some time, our guide to avoiding and fixing payroll errors covers how to scope what needs reviewing and how far back to look.

Official resources

• Record-keeping and pay slips fact sheet — Fair Work Ombudsman
• Annual Wage Review 2026 — Fair Work Ombudsman
• Pay guides — Fair Work Ombudsman
• Right to disconnect for small business employees — Fair Work Ombudsman
• Criminalising wage underpayments — Fair Work Ombudsman
• Super guarantee rates and thresholds — ATO
• About Payday Super — ATO
• Payment deadlines for Payday Super — ATO
• Do I need to register for WorkCover insurance? — WorkSafe Victoria
• How remuneration works — WorkSafe Victoria
• Long Service Leave Act 2018 — Victorian Legislation
• Long service leave – an overview — Business Victoria
• Register your business (portable long service) — Portable Long Service Authority
• Portable long service leave — Business Victoria
• Payroll tax threshold and phase-out rate — State Revenue Office Victoria
• Labour hire hosts — Labour Hire Authority
• Penalties — Labour Hire Authority
• Employing children under 15 years old — Victorian Government
• About Workforce Inspectorate Victoria — Victorian Government
• Wage Theft Amendment Act 2025 — Victorian Legislation