Single Touch Payroll compliance is a payroll function: payroll reports pay, tax, and super to the ATO each pay run. An HRIS does not lodge STP. However, STP is only accurate when the employee data behind it is correct, and that data lives in your HRIS. So an STP compliant setup pairs capable payroll with an HRIS that feeds it clean, current data.
Key takeaways
- Single Touch Payroll is lodged by payroll, not by an HRIS, so STP is a payroll capability.
- STP accuracy depends on correct employee data, which the HRIS supplies through integration.
- STP Phase 2 expanded the data reported, including employment type and income categories.
- The HRIS supports STP compliance by keeping status, classification, and details accurate and current.
- Keep payroll as the source of truth for pay and STP, and connect it to your HRIS with a two-way integration.
What does STP compliance actually mean?
STP compliance means reporting payroll information to the ATO each time you pay employees, in the required format. Single Touch Payroll sends pay, tax withheld, and superannuation data to the ATO directly from your payroll system. So compliance is about payroll lodging the right data at the right time, every pay run, rather than a separate annual process.
The important point is which system does this. STP lodgement is a payroll function, because payroll holds pay history and calculates the figures the ATO needs. An HRIS does not lodge STP. Instead, it supports STP by keeping the employee data accurate, then syncing it to payroll. So when people search for an “STP compliant HR and payroll system”, they are really describing a payroll that lodges STP plus an HRIS for mid-sized companies that keeps the data clean.
Why does STP depend on clean HR data?
STP depends on clean HR data because payroll can only report what it is given. According to the Australian Taxation Office, STP Phase 2 expanded the information employers report, including employment type, income categories, and details behind each payment. So the accuracy of your STP data depends directly on the accuracy of your employee records.
Consider what happens when the data is wrong. If an employee’s status, start date, or classification is incorrect in payroll, the STP report will be incorrect too. Because STP goes to the ATO every pay run, errors compound quickly and become visible to a regulator. So messy employee data is not just an HR problem; it becomes a tax reporting problem. This is exactly the fragmentation a single source of truth is meant to end.
The fix is to keep the employee data correct at the source and sync it. When the HRIS is the source of truth for status, classification, and personal details, payroll receives accurate inputs for STP. So the HRIS improves STP compliance indirectly, by feeding payroll the clean data it needs. This connects to your broader Australian HR compliance approach.
What is STP Phase 2, and why does it matter for HR data?
STP Phase 2 is the expanded version of Single Touch Payroll that requires more detailed reporting. It asks employers to report additional information, such as employment basis, income type, and the components behind gross pay. So payroll now needs richer, more precise employee data than under the original STP. As a result, the quality of your HR records matters more than ever.
The HR relevance is direct. Employment basis and income type are people-data attributes, so they originate in your HR records before they reach payroll. If your HRIS records these accurately and syncs them, payroll can report them correctly under Phase 2. If they live in scattered spreadsheets, someone has to key them into payroll by hand, which invites error. So Phase 2 raised the value of a clean, connected employee database.
This is why integration is central to STP compliance. A two-way integration between the HRIS and payroll keeps status, basis, and details consistent across both systems. When an employee changes from casual to permanent, that change updates once in the HRIS and flows to payroll, so STP reflects it. A strong integration layer therefore underpins accurate Phase 2 reporting.
How does an HRIS support STP compliance without doing payroll?
An HRIS supports STP compliance by owning the employee data and feeding it to payroll cleanly. It records status, classification, employment basis, and personal details, then syncs them through a two-way integration. So payroll receives accurate, current inputs for every pay run and STP lodgement, without the HRIS ever calculating pay or lodging anything itself.
This division of labour is deliberate and safer. Payroll is a specialised system with its own compliance requirements, pay history, and ATO connection. Replacing it carries real risk, so most mid-sized employers keep their proven payroll engine. The HRIS complements it by removing the data-quality problems that cause STP errors. So you get better STP compliance by improving inputs, not by merging systems.
The result is a clean split. Your payroll lodges STP and remains the source of truth for pay. Your HRIS keeps employee data accurate and provides the evidence behind classifications and changes. When the two connect well, STP reporting is accurate because the data feeding it is accurate. This is why mid-market teams choose an Australian-built HRIS that integrates with payroll rather than one that tries to replace it. Clean data also drives Fair Work compliance and correct modern award interpretation. See too award interpretation software and an HRIS built for Australian employment law.
Should you buy one system for HR and payroll, or keep them separate?
For most mid-sized Australian employers, keeping HR and payroll as separate, connected systems is the lower-risk choice. Payroll is mature, specialised, and tied to the ATO through STP. Switching it to chase an all-in-one promise introduces risk for little gain. So the better pattern is to keep your payroll and connect it to a strong HRIS.
An all-in-one system can suit very small businesses that value a single bill over depth. However, for 100 to 1,000 employees, award complexity and integration needs usually expose the limits of bundled payroll. So the specialist-plus-integration approach tends to win at this size. You keep the payroll your finance team trusts, and you add an HRIS that unifies people data and feeds payroll cleanly.
The honest trade-off is simplicity versus depth. One vendor and one bill sounds appealing, but shallow bundled modules often struggle with Australian award and STP complexity. For a mid-sized employer, keeping a proven payroll engine and connecting it through a compliance-focused HRIS is usually the safer, more accurate path.
Why is Worknice a strong HRIS for STP-ready data?
Worknice is an Australian next-gen HRIS that keeps employee data accurate and syncs it to your existing payroll, which lodges STP. Because status, classification, and details live in one source of truth, payroll receives clean inputs for every STP report. Reviewers rate it 4.9 out of 5 on G2 and 5 out of 5 on Capterra.
The reviews reflect this. On Capterra, Worknice rates 5 out of 5, where 99% of reviewers would recommend it, and users describe consolidating employee data from separate systems. On G2 it holds 4.9 out of 5. Because STP accuracy depends on clean data, that consolidation directly supports compliant reporting.
A fair caveat: Worknice does not run payroll or lodge STP; your payroll does. Worknice holds the employee data and syncs it to your payroll through a two-way integration. Most mid-market teams prefer this, because they keep a proven payroll engine and improve its inputs. You can see the payroll integrations in a free demonstration.
Frequently asked questions
What is STP compliance?
STP compliance means reporting payroll information to the ATO each time you pay employees, in the required format. Single Touch Payroll sends pay, tax withheld, and super data directly from your payroll system every pay run. So compliance is a payroll responsibility: lodging the right data at the right time, rather than completing a separate process at year end.
Does an HRIS lodge Single Touch Payroll?
No. STP lodgement is a payroll function, because payroll holds pay history and calculates the figures the ATO needs. An HRIS does not lodge STP. Instead, it supports STP by keeping employee data accurate, then syncing it to payroll. So the HRIS improves STP accuracy indirectly, by feeding payroll clean status, classification, and personal details.
What changed under STP Phase 2?
STP Phase 2 expanded the information employers report, including employment basis, income type, and the components behind gross pay. So payroll now needs richer, more precise employee data. Because much of that data originates in HR records, Phase 2 raised the value of a clean, connected HRIS that syncs accurate employment details into payroll for reporting.
Do you need one system for HR and payroll to be STP compliant?
No. STP compliance comes from capable payroll plus accurate data, not from a single combined system. Most mid-sized employers keep a proven payroll engine that lodges STP, and connect it to an HRIS that keeps employee data clean. This separate-but-connected approach is usually lower risk than switching payroll to chase an all-in-one promise.
How does an HRIS improve STP accuracy?
An HRIS improves STP accuracy by owning employee data and feeding it to payroll cleanly. It records status, employment basis, classification, and details, then syncs them through a two-way integration. So when something changes, like a casual becoming permanent, it updates once and flows to payroll, keeping STP reports correct without manual re-keying between systems.
About the author
Graham Martin is a co-founder of Worknice, an Australian next-gen HRIS. Since 2021 he has worked with hundreds of Australian HR leaders and people teams. He helps mid-sized organisations keep the employee data behind payroll and STP accurate.
This article is general information only and is not legal or tax advice. For advice on your specific STP obligations, speak to a qualified professional.
Sources
- Australian Taxation Office. “Single Touch Payroll.” https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll
- Australian Taxation Office. “STP Phase 2 employer reporting guidelines.” https://www.ato.gov.au/businesses-and-organisations/hiring-and-paying-your-workers/single-touch-payroll/expanding-single-touch-payroll-phase-2
- G2. “Worknice Reviews.” https://www.g2.com/products/worknice/reviews
- Capterra Australia. “Worknice Cost & Reviews.” https://www.capterra.com.au/software/208362/worknice
