Can't Make Payroll This Week? What Australian Employers Can Do
Payroll Gap
Employers and directors · Wages due, money not here yet · Careful guidance
Payroll is due before the expected money arrives. This guide starts with the immediate action plan, separates a failed payment from a real cash shortage, explains what to tell staff, and shows when finance may fit and when it can make the position worse.
Quick Answer
If payroll may be late, check whether the problem is a failed payment, a one-off timing gap or a recurring cash shortfall. Tell staff in writing, confirm the exact amount due, and borrow only against a dated incoming payment. For recurring gaps, use free help first.
| Your question | Short answer |
|---|---|
| Is it illegal to pay wages late? | Late pay is a contravention that must be rectified. The criminal offence introduced from 1 January 2025 applies to intentional underpayment, not honest mistakes. |
| Can I pay part now and the rest next week? | Wages are owed in full on the required day. A part payment reduces the shortfall and reads as good faith, but the run remains a contravention until it is rectified in full. |
| Is this always a finance problem? | No. If the money is already available but the payroll batch was rejected, delayed or sent incorrectly, call the bank or payroll provider. New debt does not fix a payment-processing failure. |
| What should I do first? | Check whether the payroll batch failed or the money is genuinely missing, calculate the exact amount due, tell staff in writing, and identify any dated incoming payment before you consider new finance. |
| What about super? | Wages and super are connected pay-cycle risks but have different deadlines. From 1 July 2026, contributions generally must reach employees' funds within 7 business days after payday. |
| Can a payroll loan cover wages? | Yes, but payroll loan is usually a label for business-purpose finance, not one product. It only fits a diagnosed timing gap with a dated incoming payment and a clear repayment exit. |
| Can I stand staff down to save cash? | No. A cash shortage is not a lawful stand-down cause under the Fair Work Act. Reduced hours or leave can only be agreed, not imposed. |
| What if the gap keeps recurring? | Borrowing is usually the wrong answer. That is an insolvency-boundary conversation, and unpaid super quietly removes a director's safe harbour protection. |
| Who can I call for free help? | The Small Business Debt Helpline on 1800 413 828 for the business's finances, and the Fair Work Infoline on 13 13 94 for obligations to staff. |
Payroll is due tomorrow: what should an employer do first?
If wages may not clear on time, act before the pay run fails. First separate a payment-processing failure from a genuine cash shortage, then confirm the amount and legal payday, tell staff in writing, identify any dated incoming payment, and call the right adviser before taking new debt.
- Check the payment rail. Confirm whether the money is actually missing. If funds are available but the payroll batch is rejected, pending, duplicated or sent to the wrong account, call the bank or payroll provider immediately. That is an operational problem, not a finance problem.
- Calculate the exact obligation. Confirm the total wages due, the required payday under the award or agreement, and the separate super deadline. Do not work from a rounded estimate.
- Name the incoming money. Write down the customer, invoice, settlement or other inflow, the expected date, and the evidence supporting it. If there is no named inflow, do not call the gap temporary.
- Tell staff in writing. Communicate before employees discover the problem from their bank balance. Give only a date you genuinely believe and promise a follow-up when payment is sent.
- Route the problem correctly. A one-off dated timing gap may justify finance. A recurring gap belongs with the accountant, the Small Business Debt Helpline and, where solvency is in question, a registered practitioner.
Swipe sideways to compare the three payroll problems.
| What you can see | What it usually means | The next move |
|---|---|---|
| The money is in the account, but the payroll batch failed or is pending | Payment-processing or bank issue | Call the bank or payroll provider, preserve the records and tell staff if payment may still be late. Do not take new debt to solve a payment-rail problem. |
| A specific customer payment, settlement or remittance is confirmed after payday | Potential one-off timing gap | Document the inflow and date, communicate with staff, try the non-debt actions below, then match any finance to that exact exit. |
| The gap repeats, there is no dated inflow, or super and lodgements are already behind | Structural shortfall or possible insolvency boundary | Do not treat this as an emergency-loan search. Use free financial counselling, the accountant and a registered practitioner before new borrowing. |
This page is written for employers and directors. If you are an employee owed wages, the right door is the Fair Work Ombudsman at fairwork.gov.au, not a finance guide. For employers, the most protective pattern is simple: identify the real failure, communicate early, keep the payroll record honest, and use the free help routes before a deadline turns a temporary problem into a larger one.
The stakes are higher than they were a few years ago. Wages sit under the Fair Work Act, super now runs on a pay-cycle clock, and unpaid entitlements can reach into a director's personal legal position. The law distinguishes an employer fixing a genuine mistake or timing problem from one hiding a deliberate decision not to pay. Managing cash flow honestly through a bad week, in writing, is a defensible position. Silence is not.
What does the law require when payday is at risk?
Employees must be paid in full for the work they do, and at least monthly, under the Fair Work Act's payment provisions, with pay slips given within one working day of payment (Fair Work Ombudsman, Paying wages, citing section 323; read for this guide in July 2026). The monthly rule is a floor, not the norm: awards and enterprise agreements commonly set weekly or fortnightly cycles, so the deadline that matters is the one your instrument sets. There is no lawful holding period on wages that are due. A late run is a contravention that must be rectified, even when the cause is a timing gap rather than a decision. Part payment does not change that: paying what you can on the day reduces the shortfall and shows good faith, but the obligation is payment in full, so the run remains a contravention until the balance lands.
One scope note before the sequence: this guide describes the national system, which covers the large majority of Australian employers. Sole traders, unincorporated partnerships and unincorporated trusts in Western Australia sit in the WA state system instead, where Wageline on 1300 655 266 is the equivalent door for pay obligations.
If the run is going to be late, the protective sequence is simple and unglamorous.
- Tell staff early, and in writing. Say what has happened, when pay will land, and what you are doing about it. A dated, honest note changes how every later conversation reads, with staff, with the regulator, and with a lender.
- Confirm the exact obligation. Check the award or agreement for the required pay cycle, and confirm what is owed in full, including any allowances and penalties, so rectification is complete rather than partial.
- Keep the records straight. Payroll reporting through Single Touch Payroll means the ATO can already see the pay run, so the record should show a gap being managed, not massaged. Never manipulate pay slips or reporting to cover a shortfall.
- Rectify fast, and completely. When the money lands, the late amount is paid in full, and the note to staff closes the loop.
What should you say to staff when pay will be late?
Tell staff as early as possible, in writing, why payment is delayed, the date you genuinely expect wages to be paid, and when you will confirm that payment has been sent. Do not promise a wage date or super timing that you cannot meet.
Then there is the boundary that worries employers most, and it deserves to be stated carefully. From 1 January 2025, intentionally underpaying an employee's wages or entitlements can be a criminal offence, and a court can impose fines, prison time, or both. The Fair Work Ombudsman's own wording is direct: this does not include honest mistakes (FWO, New criminal underpayment laws, read July 2026). A late run caused by a timing gap, disclosed and rectified, is not the criminal offence; it is still a contravention to fix. Small businesses also have a formal protection path: the FWO cannot refer a small business employer's conduct for possible criminal prosecution where it is satisfied the employer complied with the Voluntary Small Business Wage Compliance Code in relation to an underpayment. The law is drawing a line between a director scrambling in good faith and one hiding a decision not to pay. Stay on the right side of it in writing.
The payday super era changes what a missed pay run costs
Since 1 July 2026, super guarantee contributions must be received by employees' funds within 7 business days after payday (ATO, About payday super, read July 2026). The quarterly due dates are gone. There are limited exceptions, including the first contribution for a new employee, which is due within 20 business days of the wages being paid (Fair Work Ombudsman newsroom, December 2025). For an employer facing a payroll gap, wages and super are now part of the same pay-cycle risk, but the legal deadlines differ. Wages are due on the payday required by the applicable award, agreement or employment arrangement, while super generally must reach the employee's fund within 7 business days after payday.
Miss the window and the redesigned super guarantee charge applies. It is assessed by the ATO on qualifying earnings, with interest that compounds daily at the general interest charge rate, plus an administrative uplift amount, and further penalties can apply if the charge itself is paid late (ATO, About payday super, read July 2026). One change most older content gets wrong: the redesigned charge is tax deductible, unlike the charge it replaced. That softens the arithmetic slightly; it does not soften the exposure. There is one protective move inside the regime: if a contribution is missed, making a voluntary disclosure to the ATO before it contacts you reduces the administrative uplift component of the charge, while waiting to be found maximises it, and an assessed charge left unpaid triggers a formal Notice to Pay with further penalties behind it. Because payroll reporting and payday super run together, a missed pay run is visible to the regulator in near real time. The era of quietly catching up next quarter is over, and pretending otherwise is the most expensive mistake in this guide.
The exposure also climbs the corporate ladder. Unpaid super guarantee charge sits in the director penalty regime alongside amounts withheld from employee wages and net GST, which means the ATO can make directors personally liable through a director penalty notice. Where the position was not reported by the due date, the penalty generally cannot be remitted except by paying the liability in full (ATO, Director penalty regime, updated April 2026). The broad tax-debt landscape, payment plans and the finance that fits it are covered in the ATO tax debt loans guide; the point here is narrower. In the payday super era, super is not the obligation you quietly defer to protect wages. A missed pay run can create a second, fast-moving exposure if the contribution deadline is also missed.
Is this a timing gap or a structural payroll shortfall?
A timing gap has a specific incoming payment and a credible date; a structural shortfall repeats or has no evidence-backed exit. The test is not whether sales are usually good. It is whether this pay run can be linked to money with a name and a date, and whether super, activity statements and other obligations are otherwise current. A customer who has not paid yet is a receivables problem, which is where invoice finance may fit. A seasonal trough, lost contract or shrinking margin is an earning problem, and no facility changes that.
Signs it is a timing gap
- A specific inflow with a name and a date: a confirmed remittance, settlement or contracted payment
- The gap is rare, and this week is unusual rather than familiar
- Super, activity statements and lodgements are otherwise current
- The books would balance if the inflow had landed on time
Signs it is structural
- The gap recurs each cycle, and pay day is regularly a scramble
- Super or activity statements are already behind
- New borrowing would repay old borrowing
- The plan for repaying any facility is hope, not a date
If the left column reads like your week, the finance response below is a legitimate tool, and the wages-on-long-terms problem in particular has a well-worn answer covered in funding wages on 60-day terms. If the right column reads like your month, go to when borrowing is the wrong answer before you speak to any lender, because the structural case has legal edges that new debt makes sharper, not softer.
What should you try before applying for new payroll finance?
Before taking new external debt, rule out a payment failure, ask whether the incoming customer money can be released earlier, check existing approved capacity, and document any director funds properly. None of these actions changes the wage due date, but each can solve or reduce the gap without creating the wrong facility.
Swipe sideways to compare the actions available before a new application.
| What is happening | Action before a new application | Important limit |
|---|---|---|
| Funds are available but the payroll batch is rejected, delayed or incorrect | Escalate with the bank or payroll provider and preserve the transaction record | New borrowing does not repair an operational payment failure |
| A customer payment is genuine and due shortly | Ask for early release, a partial payment or written remittance confirmation; use ASBFEO help if the issue is a payment dispute | Do not describe an uncertain promise as a confirmed exit |
| The director can put money into the company | Record it as a documented director loan with the accountant or bookkeeper | A recurring need for personal injections is a structural warning, not a permanent solution |
| An approved overdraft or line of credit already exists | Check the available limit, terms and repayment source before drawing | Existing capacity is still debt and still needs a dated exit |
| There is no dated incoming payment, or the gap has happened before | Call the Small Business Debt Helpline, the accountant and, where needed, a registered practitioner | This is not the fact pattern for an emergency payroll loan |
Also review other outgoing payments with your accountant rather than automatically sacrificing wages, super or accurate reporting. The objective is not to make the books look better for a lender. It is to protect the pay run while preserving a truthful record of what happened and why.
Can a business borrow money to cover payroll?
Yes, business-purpose finance can cover wages when the shortfall is a genuine one-off timing gap with a dated incoming payment and a clear repayment exit. It should not be used to disguise a recurring shortfall, repair a failed payroll batch, or keep an insolvent business trading.
What is a payroll loan in Australia?
A payroll loan is not usually a distinct product category in Australia. It is a search and market label for business-purpose funding used to meet wages, commonly invoice finance, a working capital loan, an overdraft or line of credit, or property-secured short-term finance. Some search results use payroll finance specifically for recruitment and labour-hire businesses that pay workers before client invoices settle; a general employer with a one-off wage gap may need a different structure. The correct structure depends on what money is coming in, when it is coming, and what will repay the facility.
How does the payroll funding process work?
The process starts with diagnosis, not an application. The employer proves the exact pay-run need and dated inflow, the broker routes the file to the finance lane that matches that exit, the lender assesses the business and any security, and funds are used and repaid according to the documented plan.
- Triage the gap. Confirm that it is temporary, not a payment-system failure or recurring shortfall.
- Build the evidence pack. Pair the payroll amount and date with the invoice, remittance, settlement or contracted inflow that will clear it.
- Match the structure. Receivables point toward invoice finance, broader trading gaps toward working capital, and property-backed speed toward caveat or private lending.
- Review the documents and protections. Understand fees, security, guarantees, default terms and whether the lender is an AFCA member before signing.
- Use and exit the facility. Pay wages, preserve the payroll record, and clear the facility from the incoming money or other stated exit.
How much does payroll finance cost?
There is no single payroll-finance price because payroll finance is not one product. Compare the total cost to the planned exit, including interest or funding charges, line or facility fees, establishment costs, and any valuation, legal or invoice-service costs. A low headline rate is not low cost if the structure cannot be cleared when the incoming money arrives. Business-purpose credit generally sits outside the National Credit Code's consumer protections (ASIC guidance, read July 2026), so the government's neutral overview of funding choices is a sensible cross-check on any broker's framing, including ours.
Swipe sideways to compare the finance options.
| Your situation | Option that commonly fits | What it does, and the main caveat |
|---|---|---|
| A real invoice or receivable is landing, just after pay day | Invoice finance | Advances cash against the receivable so wages meet the pay cycle rather than the customer's terms; costs are a fee and a funding charge against the advance, and the facility needs genuine business-to-business invoices |
| The gap is rare but you never want to relive this week | Overdraft or line of credit, arranged as standby | Revolving capacity that sits unused until a timing gap hits; interest applies to the drawn balance plus line fees, and the lesson of most payroll scares is to arrange it before the next one |
| The gap is wider than one invoice but the business is sound | Working capital loan | A lump sum repaid from trading, assessed on the business's recent statements; it suits a defined, explainable gap, not a recurring shortfall |
| Speed is the constraint and property security is available | Caveat loan or private lending | Property-backed facilities that can move faster than mainstream timelines; a caveat sits on the property title, pricing reflects speed, and these are short-term tools that need a clear, dated exit |
| The gap recurs, or super and lodgements are already behind | None of the above | Borrowing converts a cash flow problem into a debt problem with the same cause; the honest routes are in the sections on borrowing being the wrong answer and who to call |
The product mechanics live on their own pages, and this guide deliberately does not re-teach them: how facilities advance against receivables is covered in the invoice finance guide, revolving structures in the line of credit guide and the business overdraft guide. For the facilities themselves, the lanes are invoice finance, a working capital loan, and, where property-backed speed is the constraint, caveat loans and private lending.
There is also the option that never appears in a lender comparison: your own money. Tipping in personal funds as a director loan to the company is lawful and common, and it deserves the same discipline as external finance. Document it, because an undocumented director loan is hard to prove and generally ranks as an unsecured debt behind employee entitlements if the company later fails. And read a recurring need to lend the company your own money, or to skip your own pay so the team gets theirs, as the structural signal it is: the diagnosis section applies to your money just as much as a lender's.
Borrowing to pay wages is only appropriate when the diagnosis shows a genuine timing gap. Diagnose the cause first, then match any facility to the dated incoming payment that will repay it. For some employers, the correct next step is a free advice call, not a loan.
What do lenders need, and what happens after you ask for payroll finance?
A lender needs proof that the gap is temporary and repayable, not a general statement that the business is busy. The strongest file pairs the exact payroll requirement with a dated inflow, current financial records and a short explanation of why this week is unusual.
What documents should you prepare for payroll finance?
Prepare the documents that connect the pay run to its exit before the first lender conversation. Missing evidence creates more delay than most product differences.
- The payroll report showing the amount and required payment date
- Recent business bank statements showing the cash position and trading pattern
- The invoice, remittance, contract, settlement evidence or customer confirmation behind the dated inflow
- An aged receivables position where customer payments are the exit
- The current tax, super and lodgement position, including any payment-plan status
- Property and existing-loan information if security is being offered
- A short written explanation of what caused the gap, why it is not recurring, and exactly how the facility will be cleared
An existing tax debt and its payment-plan status is visible territory, because significant overdue tax debts can become visible to lenders through the ATO's disclosure regime (ATO, Disclosure of business tax debts, as at 15 October 2025). Unpaid super reads as a distress flag to a credit team just as it does to the regulator. As consumer data right access extends to non-bank lenders, assembling evidence is slowly getting easier, but it does not change what the evidence has to show.
What happens after you contact a broker?
The first useful broker conversation is a triage call. A responsible broker should test the dated exit, identify the product lane, explain what the lender will require, and stop the finance process if the facts point to a structural shortfall rather than a temporary gap.
- Triage and route. The file is matched to receivables, working capital, existing revolving capacity or property-backed finance.
- Evidence review. The broker checks the payroll amount, inflow, statements, lodgements, tax position and security before presenting the file.
- Credit assessment. The lender tests whether the business can repay, whether the exit is credible, and whether the proposed security and guarantees fit policy.
- Documents and settlement. The borrower reviews the offer, fees, guarantees and conditions, obtains independent advice where needed, signs and satisfies settlement requirements.
- Payroll and exit. Funds reach the business, wages are paid through the normal payroll process, and the facility is cleared from the stated inflow or repayment plan.
What should you do if payroll finance is declined?
A decline is a diagnostic result, not a reason to submit the same story everywhere. Find out whether the problem is missing evidence, no credible dated exit, current arrears or lodgements, insufficient security, or a structural cash-flow issue. Fix an evidence problem if it can be fixed. If the problem is structural, stop the application loop and use the free-help and practitioner routes below.
Speed, when it happens, is earned by the file: documents ready, a specific dated inflow, clean title where security is involved, and lodgements current. Advertised fast decisions assume a standard file; a payroll-gap file with tax or super issues attached is rarely standard. The staged approach many businesses take to building facilities before they are needed is mapped in the low-doc cashflow path.
Now the protections layer, which matters most for exactly the reader with the least time to read it. Commercial credit carries the lowest level of legal protection for borrowers under Australian law (ASIC INFO 207, as at 2020 to 2024). The Australian Financial Complaints Authority can consider complaints from small businesses, generally those with fewer than 100 employees, but only against lenders that are AFCA members, and lenders offering only commercial loans are not required to be members, so check membership before you sign rather than after (a general regulatory position under AFCA's small business coverage rules, current at publication). Unfair contract terms law applies to standard form small business contracts for financial products (ASIC, unfair contract term protections, read July 2026), which is a backstop, not a shield. And a director's guarantee signed under deadline pressure is still a personal guarantee: read it, and have someone independent read it, before pay day panic signs it for you.
From our broking files, general and without figures
What we see on payroll-gap files, kept deliberately to direction rather than numbers, because a distress-adjacent loan is exactly where a made-up figure does damage.
- The files that resolve fastest are the ones where the incoming money has a name and a date: a specific remittance, a settlement, a contracted payment. "Sales are usually good" is not an inflow.
- The difference between a quick yes and a decline is usually whether the employer can show the gap is dated, one-off, and already communicated to staff. Lenders read a missed pay run as an insolvency flag until the file proves otherwise.
- The most common avoidable mistake: burning the week negotiating with one bank, then starting the specialist conversation on Thursday. Parallel conversations early beat sequential conversations late.
- The second most common: borrowing against the family home for a gap a receivable would have funded, converting a timing problem into a security problem.
- The files that go best long term are the ones where standby capacity gets arranged after the first scare, so the second gap never becomes a file at all.
General information only, from broking experience, and not financial advice. This is not an offer, an approval, or a likelihood of approval; every application is assessed on its own facts, its security, its exit and lender policy at the time. Speak to a qualified broker, your accountant and, where needed, a solicitor.
Can you reduce hours or stand staff down if payroll is short?
When cash is short, employers start researching stand-downs, so here is the plain answer before a panicked decision converts a cash problem into a workplace claim. Under section 524 of the Fair Work Act, an employer may stand down employees without pay only where they cannot usefully be employed because of industrial action (other than action organised by the employer), a breakdown of machinery or equipment for which the employer cannot reasonably be held responsible, or a stoppage of work for any cause for which the employer cannot reasonably be held responsible (Fair Work Act 2009, read July 2026). A cash shortage is not on that list. Standing staff down because the money has not landed is not a lawful stand-down; it is an unpaid suspension the employer has no right to impose, on top of the wages already owed.
What can be discussed is narrower and always consensual. Reduced hours or changed rosters can be agreed with staff, with any consultation obligations under the award or agreement followed rather than skipped. Annual leave can be taken by agreement. Redundancy is only lawful where the role itself is genuinely no longer needed: it is a structural decision with its own entitlement costs, not a Friday cash fix, and dressing a cash problem up as a redundancy creates exactly the kind of claim this section exists to prevent. Staffing transitions have their own cash rhythm, explored in the staff departure cashflow gap piece; the short version is that workforce decisions made honestly and consultatively cost less than the same decisions imposed.
For detailed workforce questions, the right door is the Fair Work Ombudsman, and the Fair Work Infoline on 13 13 94 exists for exactly this conversation, for employers as well as employees. And one line that cannot be crossed in the aftermath: an employee who asks about late pay, or takes it to the Fair Work Ombudsman, is exercising a workplace right, and treating them differently for doing so is unlawful adverse action under the Fair Work Act's general protections. Getting the workforce answer right this week is worth more than any facility in the previous section.
When is borrowing for payroll the wrong answer?
If the gap recurs, borrowing converts a cash flow problem into a debt problem with the same underlying cause, plus interest. That sentence is the whole section; what follows is the legal machinery that makes it non-negotiable. Directors must prevent the company incurring new debts, including new borrowing, if the company is insolvent or would become insolvent by incurring them (Corporations Act section 588G, read July 2026). A company that cannot pay wages, super and suppliers as they fall due, cycle after cycle, is in that territory: the Corporations Act's solvency test in section 95A asks exactly whether the company can pay all its debts as and when they become due and payable. Each new facility taken to cover the last one is a debt a court may later read against the director personally.
Here is the fact almost nobody in the finance lane publishes. The insolvent trading safe harbour, the protection that lets a director keep trading while pursuing a genuine restructuring plan, is not available unless the company is paying employee entitlements, including superannuation, when they fall due, and keeping its tax lodgements current (Corporations Act section 588GA(4), read July 2026, via the Corporations Act 2001). A director who borrows to keep trading while super goes unpaid is dismantling their own legal protection with each pay cycle. The obligation that felt safest to defer is the one holding the shield up.
The formal alternatives exist precisely for the structural case. Small business restructuring is available to companies with total liabilities not exceeding 1 million dollars, and a restructuring plan cannot be proposed until employee entitlements that are due and payable, which includes super, have been paid, and tax lodgements are up to date (ASIC, small business restructuring, read July 2026). Directors stay in control during the process. Where entitlements are the blockage, the sequencing of getting them paid is a practitioner conversation, not a do-it-yourself borrowing decision, and voluntary administration remains the broader tool. If any of this paragraph describes your company, the who to call section is the one to act on, the tax-debt dimension is covered in the ATO tax debt loans guide, and the personal exposure side sits with the director penalty regime. Never borrow to prop an insolvent book. No facility on this site or any other is built for that job.
Who enforces what: the consequences map
The consequences of a failed pay run are scattered across three regulators and two Acts, which is why nobody quite holds the whole map. Here it is in one place. Each row is qualitative or carries its cited fact inline; none of it is a prediction about your case, and the employer's move in the final column assumes good faith, because that is the only position this guide writes for.
Swipe sideways to read the full consequences map.
| What went wrong | Who enforces, and what happens | The employer's move |
|---|---|---|
| Wages paid late | Fair Work Ombudsman, under the Fair Work Act: the underpayment must be rectified, and contraventions can be enforced; criminal exposure only attaches to intentional underpayment | Tell staff in writing, rectify in full, and close the cash gap that caused it |
| Super misses the payday window | ATO: the redesigned super guarantee charge, assessed on qualifying earnings, with interest compounding daily at the general interest charge rate, an administrative uplift, and further penalties if the charge is paid late; the charge is tax deductible | Pay what can be paid, make a voluntary disclosure and engage the ATO early, and get the accountant across the position immediately |
| Super guarantee charge, withheld wage amounts or net GST stay unpaid | ATO: the director penalty regime can make directors personally liable; where the position was not reported by the due date, the penalty generally remits only by payment in full | Report on time even when payment is short, and get advice before the notice arrives, not after |
| Intentional underpayment | Criminal prosecution is possible, with fines, prison time, or both; honest mistakes are excluded, and a compliant small business cannot be referred under the Voluntary Small Business Wage Compliance Code | Never cross this line; if underpayment is discovered, rectify and disclose |
| The company cannot pay at all | Insolvency law: restructuring or liquidation; in liquidation the Fair Entitlements Guarantee, a federal scheme, can pay eligible employees capped wages, leave, notice and redundancy, but not super, which is pursued through the ATO | Stop borrowing, get a registered practitioner's advice, and let the safety net do the job it exists for |
The last row deserves its one supporting detail, because employers carrying a failing company often keep trading out of loyalty to staff. The Fair Entitlements Guarantee covers unpaid wages capped at 13 weeks, unpaid annual and long service leave, payment in lieu of notice up to 5 weeks, and redundancy up to 4 weeks per full year of service, for eligible employees of a liquidated employer, claimed within 12 months; unpaid super cannot be claimed under it (Department of Employment and Workplace Relations, read July 2026). Employees have a floor. Directors trading on to avoid using it are usually increasing the super shortfall the scheme cannot cover, which is the exact opposite of protecting staff.
Who should you call before borrowing?
Every option on this page gets better when it is taken early and with advice, and the advice layer here is free. None of the services below sells finance, none of them reports you for calling, and a financial counsellor's read on the business costs nothing and forecloses nothing. If the structural signs in the diagnosis section looked familiar, this section is the action item, before any lender conversation.
Where to get help
The Small Business Debt Helpline on 1800 413 828 (sbdh.org.au) gives free, independent, confidential financial counselling to small business owners, set up by Financial Counselling Australia with Australian Government support. The Fair Work Infoline on 13 13 94 answers obligation questions for employers as well as employees, including pay cycles, agreements and consultation.
Where the gap exists because a customer has not paid, the Australian Small Business and Family Enterprise Ombudsman (asbfeo.gov.au) runs free assistance for resolving payment disputes. Call your accountant or bookkeeper today, because they can see the lodgement and payroll reporting position the whole situation turns on. And where the company cannot pay its debts as they fall due, a registered restructuring practitioner or liquidator should be in the conversation before any new borrowing, not after it fails.
A note on sequence, because it is the part employers get backwards: the free calls come first. A financial counsellor or accountant who confirms the gap is a genuine timing gap makes every later finance conversation faster and safer. One who says it is structural has just saved you from funding the wrong problem at short-term pricing.
What should happen after the pay run is fixed?
Once wages have been paid, close the loop with staff, reconcile every payroll and super record, clear or document the funding used, identify the root cause, and put a trigger in place before the next pay cycle. A payroll crisis is only resolved when the cause is less likely to repeat.
Swipe sideways to follow the post-payroll reset.
| Stage | Action | Why it matters |
|---|---|---|
| Close the staff loop | Confirm in writing that wages were sent, when they should appear, and when super was or will be paid | Employees should not have to discover the resolution from their bank account, and the written record closes the communication trail |
| Reconcile the obligations | Check wages, allowances, pay slips, Single Touch Payroll reporting, super and any remaining underpayment balance | Paying the main transfer does not fix an incorrect pay run or incomplete reporting |
| Record and clear the funding | Repay short-term finance from the planned exit, or record director funds correctly with the accountant | The emergency facility should not quietly become permanent working capital without a fresh assessment |
| Find the root cause | Identify whether the trigger was a bank failure, one slow debtor, seasonal timing, margin pressure, tax arrears or an operating loss | Different causes require different prevention, and only some justify standby finance |
| Prevent the next gap | Map payroll, super, tax and major supplier dates against confirmed receipts; set debtor-escalation triggers; arrange standby capacity only if the business is otherwise sound | The best payroll facility is capacity arranged before the next emergency, not debt found after payday is already at risk |
Use the first scare to rebuild the cash-flow calendar around pay cycles rather than month-end accounting. If the reset shows that the company needs new money every payroll cycle, return to the section on when borrowing is the wrong answer. That finding is more valuable than a second emergency approval.
Scenario: a timing gap, handled early
What made this scenario work is everything before the facility: the inflow had a name and a date, the gap was rare, the staff already knew, and the exit was the receivable itself. That is the whole pattern this guide exists to describe, and it is the only pattern in which a working capital facility or receivables advance deserves to be called the answer.
Scenario: when borrowing was not the answer
The two scenarios are the same week viewed from different books. One business had a dated inflow and a rare gap; the other had a pattern. The discipline this page argues for is refusing to treat the second case like the first, no matter how available the finance is, and the section on when borrowing is the wrong answer is the law's version of the same argument.
A payroll emergency can be an operational payment failure, a one-off timing gap, a recurring structural shortfall, or an insolvency boundary. Check the bank and payroll rail first. If cash is genuinely missing, calculate the exact obligation, communicate with staff in writing, and identify the dated incoming money before considering finance. A genuine timing gap may fit invoice finance, existing revolving capacity, a working capital loan, or property-backed short-term finance, but the structure must match the exit and the total cost must be understood. A recurring gap needs free financial counselling, the accountant and, where needed, a registered practitioner, not another emergency application. After wages land, reconcile payroll and super, close the staff loop, clear the facility and fix the root cause. Diagnose the real failure, communicate early, take the free advice before paid money, and borrow only for a gap with a date on it.
Key takeaway: first rule out a payment failure, then prove the dated exit, and treat the post-payroll reset as part of solving the crisis.If the gap is recurring, start with the free help routes rather than a lender. If it is a dated one-off gap, these are the next steps.
Frequently Asked Questions
Paying late breaches the employer's obligations: employees must be paid in full and at least monthly, and awards and agreements usually set a tighter cycle. A late run caused by a timing gap is a contravention that must be rectified, but it is not the criminal offence: since 1 January 2025 the criminal offence applies to intentional underpayment, and the Fair Work Ombudsman says this does not include honest mistakes. Tell staff early, in writing, and fix it fast.
The underpayment must be rectified, and the Fair Work Ombudsman can enforce that. Employees can raise it with the FWO, and repeated or unresolved late pay invites scrutiny of the whole employment record. Late super now compounds the problem separately, because contributions must reach funds within 7 business days after payday and a missed window triggers the super guarantee charge. The employer's move is early communication, rectification, and closing the cash gap that caused it.
There is no lawful period of holding off on wages that are due. The floor is payment in full at least monthly, and most awards and agreements require weekly or fortnightly pay, so the real deadline is the cycle your instrument sets. A gap of days is still a contravention to rectify, not an allowance to use. If the money cannot be there on the due date, the honest sequence is to tell staff in writing, fix the shortfall, and rectify quickly.
Intentional underpayment of wages or entitlements can be prosecuted as a criminal offence, and a court can impose fines, prison time, or both. The offence targets deliberate conduct, not honest mistakes. Small businesses have a protection path: the Fair Work Ombudsman cannot refer a small business employer for possible criminal prosecution if satisfied the employer complied with the Voluntary Small Business Wage Compliance Code in relation to an underpayment.
Yes, but a payroll loan is not usually a distinct product category in Australia. It is a label for business-purpose funding used to meet wages, commonly invoice finance against a specific receivable, a working capital loan, standby overdraft or line of credit capacity, or property-secured caveat loans or private lending where speed is the constraint. Borrowing only fits a diagnosed timing gap with a dated incoming payment and clear exit. If the gap recurs, borrowing is usually the wrong answer.
It depends on the file, not the advertising, so no day-count is promised here. The speed drivers are document readiness, a specific dated inflow such as a confirmed remittance or contracted payment, clean security where property is offered, and current lodgements. A file with an unexplained tax position or unlodged statements moves slowly with any lender. Preparing the evidence early, and talking to more than one lane in parallel, matters more than any advertised turnaround.
From 1 July 2026, super guarantee contributions must reach employees' funds within 7 business days after payday. Miss the window and the redesigned super guarantee charge applies: assessed by the ATO on qualifying earnings, with interest compounding daily at the general interest charge rate and an administrative uplift, and further penalties can apply if the charge itself is paid late. One change from the old regime: the redesigned charge is tax deductible. The ATO can see the position in near real time through payroll reporting. If a contribution is missed, a voluntary disclosure to the ATO before it contacts you reduces the administrative uplift component of the charge.
Yes, in defined ways. Unpaid super guarantee charge sits in the director penalty regime alongside amounts withheld from employee wages and net GST, so the ATO can make directors personally liable, and where the company's position was not reported by the due date the penalty can generally only be removed by payment in full. Separately, unpaid employee entitlements including super remove the insolvent trading safe harbour, and any personal guarantee a director has signed is its own exposure.
No. The Fair Work Act allows an unpaid stand down only where employees cannot usefully be employed because of industrial action, a breakdown of machinery or equipment the employer cannot reasonably be held responsible for, or a stoppage of work the employer cannot reasonably be held responsible for. A cash shortage is not a listed cause. What can be discussed instead is reduced hours or annual leave by agreement, with any consultation obligations under the award or agreement followed.
The Fair Entitlements Guarantee, a federal scheme, can pay eligible employees of a liquidated company unpaid wages capped at 13 weeks, unpaid annual and long service leave, payment in lieu of notice up to 5 weeks, and redundancy pay up to 4 weeks per full year of service, subject to eligibility conditions and a 12-month claim window. Unpaid super cannot be claimed under the scheme: it is pursued separately through the ATO. FEG is a safety net for employees, not a plan for employers.
What sources support this guide?
This guide is built on primary sources: the Fair Work Ombudsman's guidance on paying wages and the criminal underpayment laws, the ATO's payday super and director penalty pages, the Fair Work Act and the Corporations Act as enacted, ASIC's guidance on how commercial lending is regulated and on small business restructuring, and the Commonwealth's Fair Entitlements Guarantee and small business support services. Each was read again for this guide, and every fact is shown with its source beside it. The table shows what supports which claim, and how current it is.
Swipe sideways to read the source map.
| Source | What it supports | As at |
|---|---|---|
| Fair Work Ombudsman, Paying wages (FW Act s 323) | Payment in full, at least monthly, and pay slips within one working day of payment | Jul 2026 |
| FWO newsroom, criminal underpayment laws and payday super | The intentional-underpayment criminal offence from 1 January 2025, the honest-mistakes exclusion, the Voluntary Small Business Wage Compliance Code protection, and the new-employee 20 business day rule | Dec 2025 to Jul 2026 |
| ATO, About payday super and missed payment guidance | The 7 business day window from 1 July 2026, and the redesigned super guarantee charge: qualifying earnings, daily compounding interest, administrative uplift, ATO assessment, tax deductibility, and the voluntary disclosure and Notice to Pay process | Jul 2026 |
| ATO, Director penalty regime (QC44005) | Personal liability for unpaid withheld wage amounts, net GST and super guarantee charge, and the payment-only remission where the position was not reported by the due date | Apr 2026 |
| Fair Work Act 2009, s 524 and general protections | The three lawful stand-down causes, that a cash shortage is not one of them, and that adverse action against an employee for raising or reporting a pay concern is unlawful | Jul 2026 |
| Corporations Act 2001, ss 95A, 588G and 588GA | The solvency test of paying debts as and when they become due and payable, the duty to prevent insolvent trading, and the safe harbour preconditions of paying employee entitlements including super and keeping tax lodgements current | Jul 2026 |
| ASIC, small business restructuring; ASIC credit and UCT guidance | The 1 million dollar liabilities ceiling and paid-entitlements precondition for a restructuring plan; business-purpose credit sitting outside the National Credit Code; the lower protection level on commercial finance; unfair contract terms protections | Jul 2026 |
| DEWR, Fair Entitlements Guarantee; AFCA; Small Business Debt Helpline | What FEG covers and that super is excluded; AFCA's small business coverage of member lenders only; the free counselling services and phone numbers | Jul 2026 |
| WA Wageline; Australian Small Business and Family Enterprise Ombudsman | The WA state system scope note for sole traders and unincorporated partnerships and trusts, with Wageline as the contact, and ASBFEO's free assistance for resolving payment disputes | Jul 2026 |
Regulatory positions are summarised here, not reproduced in full, and none of this is legal, tax or financial advice. The payday super regime is new and its administration will keep developing, thresholds and rules can change, and your award or agreement sets obligations this general guide cannot see. Confirm the detail on the current government pages, and with your accountant, a financial counsellor or a solicitor, before you act.
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