Global Employer Services update

May 2026 Global Employer Services Update

Welcome to RSM’s May Employer Services Update. 

In this edition, we cover key developments in wage compliance, payroll tax, Payday Super reforms, important fringe benefits tax updates, and recent ATO determinations relevant to employers. 

Watch the full discussion in our latest video update, then explore the key insights below to help your organisation prepare, comply and stay ahead of change. 

Global Employer Services update - Transcript

Welcome to RSM’s latest Global Employer Services update. 

 Wage compliance – payroll systems   

Apple’s Australian operations identified an issue in its legacy payroll and HR systems that resulted in the incorrect deduction of leave where public holidays fell during periods of annual leave. The issue affected a significant number of current and former employees and was identified through an internal review.

Remediation is underway, including the restoration of leave balances for current employees and back‑payments to former employees. The Fair Work Ombudsman has been notified.

This type of public holiday and leave interaction failure is a recurring area of non‑compliance observed across many large employers and reflects broader payroll system and governance risks. The issue is comparable in nature to the underpayment disclosed by BHP in 2023, which resulted in remediation costs of approximately $430 million and highlighted the significant exposure that can arise from systemic failures to comply with the National Employment Standards. 

 Wage compliance – aged care sector  

Southern Cross Care has entered into an Enforceable Undertaking with the Fair Work Ombudsman after identifying systemic payroll errors that resulted in more than $11.7 million in underpayments to approximately 5,500 current and former employees.

The underpayments occurred over a prolonged period from July 2017 to October 2024 and were self‑identified through a payroll audit initiated in 2023 following an employee query. The organisation voluntarily disclosed the non‑compliance in November 2023 and has since commenced a large‑scale remediation program.

The Fair Work Ombudsman found the underpayments were driven by deficiencies in the time and attendance system and the use of a manual payroll process that was inconsistent with enterprise agreement requirements. This resulted in incorrect payments of overtime, penalty rates, shift loadings, annual leave loading and allowances.

As at April 2026, Southern Cross Care had repaid more than $10.1 million to over 3,600 employees, with further payments underway. In addition to financial remediation, the Enforceable Undertaking requires the organisation to replace its payroll systems, commission an independent compliance audit, and strengthen governance and oversight arrangements. This reinforces regulatory expectations that employers proactively identify and remediate systemic payroll risks before they develop into significant compliance exposure.

 Wage compliance – SCHADS Award 

In Fair Work Ombudsman v Jats Joint, the Full Federal Court dismissed an appeal regarding night‑shift loadings under the SCHADS Award.

The Court confirmed that a “sleepover” does not constitute work and is properly treated as a break between shifts, unless the employee is required to perform work during that period. As a result, night‑shift loadings are not payable for shifts worked immediately before or after a sleepover where no ordinary hours are worked between midnight and 6.00 am. 

 Wage compliance – Western Australian hospitality sector 

Industrial inspectors conducted a targeted compliance campaign across cafes and restaurants in Perth’s northern suburbs, visiting 13 businesses between late 2024 and February 2026.

Underpayments were identified in nine of those businesses, affecting around 60 per cent of employees. Average recoveries were just under $1,300 per affected worker. Inspectors also identified multiple record‑keeping breaches across the businesses reviewed.

This activity is consistent with the increasing level of joint compliance action by the ATO and the Fair Work Ombudsman, including initiatives such as Operation Crimson. 

 Wage compliance – rest break class actions  

Rest break class action litigation continues across the food and retail sectors, relating to alleged failures to provide paid 10‑minute rest breaks to casual employees.

In February 2026, KFC settled a rest break class action for $28.8 million, with approximately 90,000 current and former employees eligible for compensation. Class actions against McDonald’s and Grill’d remain ongoing. 

 Superannuation – Payday Super updates 

The ATO and APRA have issued a joint letter warning that some superannuation funds are not on track for the commencement of Payday Super on 1 July 2026.

From that date, superannuation contributions must be allocated or returned within three business days. Regulators have emphasised the need for system readiness and the treatment of contribution processing as a critical operation under CPS 230.

The ATO has also released eight implementation updates, confirming additional changes including the move to qualifying earnings and increased real‑time data matching through Single Touch Payroll. 

 Fringe benefits tax – commercial car parking stations 

In Commissioner of Taxation v Toowoomba Regional Council, the Full Federal Court considered whether a shopping centre car park constituted a “commercial parking station” under the Fringe Benefits Tax Assessment Act 1986.

At first instance in February 2025, the Federal Court found in favour of the Council, concluding that the car park was not operated commercially for profit and therefore fell outside the statutory definition. This decision challenged the ATO’s broader interpretation in Taxation Ruling TR 2021/2.

However, in April 2026, the Full Federal Court allowed the Commissioner’s appeal, overturning the earlier decision and determining that the parking facility did constitute a commercial parking station for FBT purposes.

This outcome effectively restores the ATO’s broader interpretation and confirms that employer‑provided car parking near paid shopping centres, hospitals and similar facilities may give rise to car parking fringe benefits, even where parking revenue is not the primary commercial objective. The decision significantly reduces employers’ ability to rely on the not‑for‑profit operational purpose of third‑party car parks and reinforces car parking FBT as a key compliance risk that employers should carefully reassess.