The Future of Payroll: Embracing Change for 2026 and Beyond

Debbie C.
Dec 18, 2025
4 min read

Updated: Jan 18

C-suite leaders and business owners, 2026 isn't just another year — it's a defining inflection point for Australian organisations. With Payday Super mandating super payments on payday from 1 July 2026¹, and Artificial Intelligence (AI) rapidly automating compliance and unlocking strategic insights², clinging to outdated structures where Payroll sits subordinate to HR or Finance is no longer viable. It's a liability.

Payroll is evolving from a back-office function into the strategic nexus of people data, financial flows, and regulatory compliance. Forward-thinking leaders must ask: Should Payroll now lead HR and Finance alignments? Or should we dismantle silos entirely and create a unified, AI-powered powerhouse?

This isn't incremental change — it's a competitive necessity. Organisations that act now will gain agility, reduce risk, and drive profitability. Those that delay in facing our new world's tech-driven AI-reality will face escalating costs and sadly risk talent attrition. The change will happen, and it is moving much faster than we ever imagined.

The Outdated Debate: Why Traditional Structures Are Failing Now

Historically, Payroll placement splits roughly evenly — around 38% under HR, 36% under Finance, and the rest in shared models³. But this duality is increasingly problematic in Australia's complex regulatory landscape.

HR-led Payroll prioritises employee experience and Award compliance but often lacks the financial rigour a business needs. This can lead to budgeting misalignments and cash flow blind spots — especially critical with Payday Super's impact on working capital¹.
Finance-led Payroll excels at fiscal accuracy and tax reporting but can treat pay as purely transactional. This approach misses opportunities to link employee compensation with engagement and retention.

In a 2025 survey, payroll professionals highlighted growing complexity from regulations like STP Phase 2 and impending Payday Super as top challenges⁴. Siloed structures amplify errors, delays, and risks. With ATO scrutiny intensifying, misalignment isn't just inefficient — it's very expensive.

The Disruptive Force: AI and Payday Super Demand Payroll Leadership

By mid-2026, Payday Super will require real-time processing — super paid alongside wages, reaching funds within seven business days¹. The free Small Business Superannuation Clearing House closes, forcing investment in robust systems⁵. This shift strains cash flow and demands flawless integration.

Australia's Payroll sector is embracing AI technology much faster than expected. A landmark 2025 report shows AI already enhancing accuracy and compliance, with adoption set to accelerate in 2026². AI will automate many systems:

Error detection
Predictive labour costing
Real-time compliance checks
Roster optimisation⁶

Payroll holds the richest dataset — employee records, hours, deductions, and outflows. AI-amplified payroll delivers predictive insights: forecasting turnover from pay patterns, flagging Award breaches proactively, or modelling workforce costs against revenue⁷.

Why Elevating Payroll is Essential in 2026

Payroll needs to be elevated in 2026 for several reasons:

Strategic Data Command: Centralise AI-driven insights to inform talent planning (HR) and budgeting (Finance). This breaks silos, enabling faster decisions and turning data into a true competitive weapon for proactive workforce strategy.
Compliance Dominance: Position Payroll as the central safeguard against ATO penalties and regulatory risks. AI will act as an always-on co-pilot to ensure seamless Payday Super adherence, Award compliance, and multi-jurisdictional accuracy.
Cost and Efficiency Gains: Unlock automation of routine tasks to free up resources for high-value analysis. This drives significant overhead reductions, optimises cash flow, and delivers measurable improvements to your bottom line.
Talent and Role Transformation: As AI automates routine transactions, professionals across Payroll, HR, and Finance will transition into more strategic sales and advisory roles. They will champion AI-powered systems, demonstrate ROI to stakeholders, and promote innovative solutions. With AI's rise, honesty and integrity will be paramount in these sales functions. Purely transparent, ethical advocacy built on accurate data and unwavering compliance will differentiate your Trusted Leaders from the rest.

Organisations treating Payroll as a strategic function in 2026 will thrive. Those that don't? Higher risks, slower adaptation, and unfortunately, lost ground.

Eye-level view of a modern digital dashboard showing payroll, HR, and finance data integration — People & Money Data Integration Dashboard Showing AI-driven Insights

The Radical Vision: Merge Payroll, Finance, and HR to Modernise for 2026 Dominance

Flipping reporting lines is bold — but merging HR, Finance elements, and Payroll into one AI-Centric Department (AiCD) is transformative. Integrated platforms already enable end-to-end Workforce Management (WFM).

This unified structure leverages AI for holistic outcomes: Hire-to-Retire (HtR) efficiency, real-time people-money alignment, and proactive strategy.

Roles in organisations will finally evolve from transactional to advisory. They will champion AI tools, optimise costs, and link Payroll to exceptional performance outcomes, human innovation, and true business growth and ROI.

RUNPAY's Recommendations for a New Merged Department Name to Signal the 2026 Shift

Money & People Directorate: Elevates Payroll with its connection to Finance and HR explicitly.
Workforce Intelligence Command: AI-powered decision centre.
People & Finance Hub: Blends human capital and fiscal mastery.
Business Workforce Engine: Forward-looking workforce, tech-driven core.

Your 2026 Mandate: Lead the Change

Australian leaders face a clear fork in the road. With Payday Super enforcing real-time discipline and AI redefining possibilities, 2026 demands action from all of us. Elevate Payroll to leadership or forge a unified department — and truly unlock collaboration, resilience, innovation, and business advantage.

There is just no time to delay a small introduction to change anymore. Your competitors will pull ahead — they already are. The time to take just one step toward restructure is now. Just before 1 July 2026 will unfortunately only force reactive scrambling and internal workforce culture challenges, and none of us want that.

Convene your leadership team and introduce the topic. Audit your systems. We must embrace this Payroll Revolution. We all depend on it — it's payroll.

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