How payroll services for law firms usually work
A focused engagement starts with discovery: structure, headcount, roles, awards, pay cycles, software, leave policies, current issues and deadlines. We then complete setup or remediation, run pay cycles, and lodge required reports on time.
Typical stages include:
- Setup and clean-up: payroll settings, pay items, award rules, leave accruals, super funds, STP 2 mapping and opening balances.
- Pay run rhythm: timesheet capture, approvals, leave management, payroll processing, super and deductions, and payment files.
- Reporting and lodgements: STP submissions, super via SuperStream, payroll tax where applicable, and year-end finalisation.
- Continuous improvement: process documentation, cross-checks with practice management tools, and periodic compliance reviews.
Scope of payroll services for law firms
- Onboarding and offboarding: TFN and super stapling checks, contracts alignment, induction paperwork and final pays.
- Award interpretation for support staff (e.g. Legal Services Award 2020) and appropriate treatment for lawyers.
- Leave and entitlements: annual, personal, parental, public holidays, TOIL and part-time accrual rules.
- Allowances and deductions: continuing legal education, travel, mobile, uniforms, salary sacrifice and FBT touchpoints.
- Software configuration: Xero, MYOB, Employment Hero/KeyPay and links to LEAP, Actionstep, Affinity or similar.
- STP 2 compliance: income types, disaggregation of gross, employment basis and cessation reasons.
- Super and payments: SuperStream contributions, payment files, reconciliations and variance investigation.
- State payroll tax preparation where thresholds apply, including grouping considerations.
- Year-end finalisation: STP final events, reconciliations, reports for your tax accountant and owners.
If you also need bookkeeping or BAS alongside payroll, see Bookkeeping for Law Firms and BAS Agent Services.
Australian compliance to keep in view
- PAYG withholding applies once you have employees; register with the ATO and lodge via STP-enabled software.
- Single Touch Payroll Phase 2 requires detailed data for each pay event; configure income types and allowances correctly.
- Superannuation Guarantee is 11.5% from 1 July 2024; use SuperStream and check stapled super for new starters.
- Fair Work Awards: support roles are often under the Legal Services Award 2020; some lawyer roles may be under the Professional Employees Award 2020 or award-free. Confirm classifications and penalty/OT rules.
- State payroll tax may apply once wages exceed your state/territory threshold; check your State Revenue Office.
- Announced change: payday super is slated to commence from 1 July 2026; plan for cash flow and process updates.
What to compare before you commit
Scope
Confirm the engagement covers setup, ongoing pay runs, STP 2, super, year-end finalisation and any payroll tax filings, not just “processing”.
Software fit
Check experience with your stack (e.g. Xero, MYOB, Employment Hero/KeyPay) and links to LEAP, Actionstep or Affinity for time/leave.
Turnaround and communication
Agree on cut-offs, approval steps, urgent escalation and reporting cadence so deadlines aren’t missed.
Commercial fit
Compare fixed vs variable fees, confidentiality protocols, and whether you also want bookkeeping or advisory support.
Software and integrations common in legal practices
Reliable payroll for law firms often blends payroll software with practice management. We commonly see:
- Payroll engines: Xero Payroll, MYOB, Employment Hero/KeyPay.
- Practice tools: LEAP, Actionstep, Affinity and Microsoft 365 workflows for approvals and records.
- Approvals and audit: documented cut-offs, maker–checker reviews, and secure storage of payroll reports.
The right setup reduces double handling, aligns leave and timesheets, and feeds accurate costs into your management reports. If you are migrating systems, coordinate with Bookkeeping Services and your Tax Accountant to keep records consistent.
Best next steps
Define the outcome you want: smoother pay runs, compliance certainty, clearer reports, a software change or a full finance tidy-up. Shortlist providers who explain how they will get you there and who demonstrate sector knowledge.
Explore related topics: Law Firm Accountant, Bookkeeping for Law Firms, Tax for Law Firms, or our general Payroll Services hub if you want a broader comparison.
Frequently asked questions
Which award applies to staff in a law firm?
Many support roles are under the Legal Services Award 2020, while some lawyer roles may sit under the Professional Employees Award 2020 or be award-free depending on duties and remuneration. Confirm coverage, classifications and penalties with Fair Work or your employment adviser.
What does STP Phase 2 change for law firm payroll?
STP 2 adds more detailed data requirements including income types, employment basis, leave details and disaggregation of gross. Ensure your payroll software is STP 2 ready and that each pay item is mapped correctly.
What super rules should law firms watch?
The Superannuation Guarantee is 11.5% from 1 July 2024. Use SuperStream for contributions, check stapled super for new starters, review any salary sacrifice/FBT implications, and plan ahead for the government’s announced payday super commencing 1 July 2026.
Do law firms need to register for payroll tax?
Possibly. Payroll tax is a state/territory levy with thresholds and grouping rules. If your Australian wages exceed your local threshold, registration and periodic lodgements are required. Check your State Revenue Office for the latest thresholds and due dates.