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The Silent Takers: Payroll Fraud’s Hidden Toll on Australian Businesses

The Silent Takers: Payroll Fraud’s Hidden Toll on Australian Businesses

Duane Cloete and Elrich Van Zyl

Payroll—the heartbeat of every business, quietly ensuring wages, entitlements, and trust—is increasingly under threat. Payroll systems have become prime targets for exploitation by insiders and cybercriminals. In the Asia Pacific region, payroll fraud represents approximately 7% of occupational fraud incidents. In Australia, it is emerging as a significant yet hidden risk, draining millions from unsuspecting companies, particularly small businesses lacking adequate internal controls.

Common schemes uncovered during forensic audits include fabricated timesheets, inflated commissions, dodgy expense claims, and notably, "ghost employees"—phantom workers who remain on payroll long after leaving or who never existed at all.

While traditional fraud methods persist, digital payroll fraud is also rapidly increasing. With remote work now commonplace, payroll diversion scams, where cybercriminals impersonate employees to redirect pay into fraudulent accounts, are becoming more frequent. The surge in phishing attacks combined with weak verification processes has made these scams easier to execute.

Recent high-profile cases illustrate just how quietly payroll fraud occurs, how long it takes to detect, and the scale of its financial impact. In April 2024, a 68-year-old Melbourne grandmother and former bookkeeper was jailed after stealing $4 million over seven years from a family-run construction firm. Initially driven by gambling addiction, she diverted company funds into personal accounts, funding luxury cruises, gambling, and shopping sprees. Her actions nearly collapsed the family business and severely damaged personal relationships, leading to a minimum three-year prison sentence.

Similarly, in January 2025, a 39-year-old Brisbane payroll manager received a seven-year sentence for defrauding two employers of approximately $850,000 to finance gambling and personal expenses, including surgery. The court emphasised the severe breach of trust and lasting damage to the companies involved.

During a recent Moore Australia (WA) Forensic Services investigation, it was revealed that an office manager of a small business fraudulently embezzled more than $100,000 through unauthorised payroll transactions, including illegitimate annual leave, sick leave, and personal expenses payments. A lack of oversight and failure to segregate duties allowed this fraud to continue unnoticed. The case is ongoing, with WA Police pursuing further charges.

These incidents are not isolated. According to the Association of Certified Fraud Examiners (ACFE), payroll fraud typically goes undetected for about 18 months, costing businesses an average of over $50,000 per case.
Australia’s regulatory framework provides some safeguards. Wage theft is now criminalised, and entities such as the Fair Work Ombudsman and Australian Taxation Office actively target sham contracting—where genuine employees are misclassified as contractors to evade entitlements. High-profile cases like Plutus Payroll, where $100 million in tax withholdings disappeared, illustrate the vulnerabilities inherent in outsourced payroll services.

Certain industries face elevated risks, particularly construction (due to transient workforces and contractor misuse), hospitality (vulnerable to "buddy punching" - one employee clocks in or out on behalf of another), and transportation (challenged by remote supervision). Small businesses are disproportionately affected, often lacking the resources for effective segregation of payroll duties, creating ideal conditions for silent manipulation.

Fortunately, organisations are increasingly adopting preventive measures. Between 2023 and 2025, Australian businesses have enhanced security through biometric clock-ins, AI-driven fraud detection systems, and mandatory Single Touch Payroll (STP) reporting to the ATO. Coupled with greater transparency and stronger whistleblower protections, these initiatives are closing security gaps.

Yet, the fundamental lesson remains clear —payroll fraud thrives in silence, exploiting trust, complacency, and unchecked authority. As Australian businesses continue to evolve, they must proactively scrutinise their payroll systems, recognising that without proper vigilance, even the most trusted employee can become a fraudster. To effectively combat payroll fraud, organisations need robust internal controls, regular payroll audits, and anonymous reporting mechanisms, (through which approximately 48% of occupational fraud in the Asia-Pacific Region is detected). These measures collectively strengthen detection capabilities, disrupt fraudulent activities early, and safeguard organisational integrity.

No organisation looks forward to needing a forensic accountant or auditor — particularly when facing the complexities of occupational payroll fraud. These cases often involve trusted insiders exploiting systems over extended periods, making detection difficult and the fallout significant. When it becomes necessary to engage a forensic expert, it's essential to choose a professional who combines deep technical skill, innovative investigative methods, and the ability to work closely with your organisation to not only uncover the issue but help implement measures that prevent it from happening again.

Moore Australia’s forensic accounting and audit specialists have decades of combined experience in identifying, investigating, and remediating payroll fraud. We stay at the forefront of professional development and evolving fraud methodologies to ensure our clients receive the most effective support.

If you suspect or wish to prevent payroll-related fraud within your organisation, we encourage you to contact your local Moore Australia Forensics Advisor.

Trust is essential, but verifying payroll remains critical.