The AI turning point in payroll and HR: Why the biggest challenge isn't technology

• 49% of organisations have not adopted AI
• 33% don’t know whether their payroll system uses AI
• Privacy, compliance and trust remain the biggest barriers
• The 70% capability gap may be the profession’s biggest challenge
• Industry leaders are already looking ahead to 2028

The conversation brought together leaders from payroll, HR and technology, including Ross Heron, Chief Executive Officer of the Australian Payroll Association; Joseph Lyons, President of ELMO Group; and Alex Taylor, Co-Founder and Chief Impact Officer at ZestHR. Together, they explored where the industry stands today and what it will take to move forward.

AI is moving fast, but payroll and HR adoption is moving at a different pace. That was the focus of The AI Turning Point in Payroll & HR, where industry leaders came together to examine what AI adoption really looks like in practice and what’s holding it back.

The research found that 49% of organisations report no AI adoption at all, showing that for many, AI in payroll is still more future ambition than present-day reality. But the conversation wasn’t defined by hesitation alone. It also revealed growing momentum, with payroll teams emerging as stronger drivers of AI adoption than executive leadership.

For payroll and HR teams operating in highly regulated environments, the challenge is not simply innovation. It’s balancing productivity gains with compliance, governance and employee trust. The question is no longer whether AI should be used. It’s how it can be adopted responsibly.

Why this matters

Payroll and HR sit at the intersection of compliance, employee trust and operational efficiency. As AI becomes more accessible, organisations are being asked to move faster without losing control — a balancing act that will define the next phase of adoption.

One of the most interesting findings was not how many organisations have adopted AI, but who is driving it. The research found that payroll professionals are leading AI initiatives ahead of executive leadership, IT departments and HR teams. mThat challenges the assumption that AI strategies always start in the boardroom. Increasingly, momentum is coming from payroll teams that see where technology can reduce manual work, improve accuracy and unlock efficiency.

Perhaps the most surprising finding from the report is the lack of awareness around AI capabilities — or even whether they already exist.

AI awareness remains surprisingly low

• 33% don’t know whether their payroll system contains AI functionality
• 31% believe their system has no AI capabilities
• Only 6.5% report comprehensive AI features

The message is clear: Adoption is not always being blocked by technology. In some cases, organisations simply don’t know what’s already available to them.

Many payroll and HR platforms already include AI through automation, intelligent workflows and reporting tools. But if users don’t understand those features or how to apply them, adoption will stay limited. Closing the awareness gap may be just as important as investing in new AI capability.

Awareness is one challenge. Trust is another.

What’s holding organisations back?

• 71% cite data privacy and security concerns
• 46% identify a skills gap
• 38% highlight compliance and audit risks

For payroll and HR teams, those concerns are understandable. These functions handle highly sensitive employee data and operate in complex regulatory environments, so privacy, compliance and governance are central to any AI conversation.

Webinar panellists also highlighted the growing importance of responsible AI frameworks such as ISO 42001 in helping organisations establish clear governance practices. But uncertainty around data storage, compliance obligations and AI decision-making continues to shape adoption decisions.

Building trust isn’t about removing risk. It’s about helping organisations understand it, govern it and use it with confidence.

If one theme came through clearly, it was this: payroll and HR professionals know they need to build AI capability.

The capability gap

• 70% say understanding how AI works is their biggest capability need.
• Only 5% feel very confident in their understanding of AI.

That gap between need and confidence is one of the profession’s biggest challenges. But capability isn’t just about training. It’s about readiness.

What AI readiness looks like in practice

• Leadership: creating organisational readiness and setting direction.
• Productivity: moving beyond experimentation to measurable outcomes.
• Examples of success: sharing practical use cases that build confidence and buy-in.
• Agents doing the work: using AI and automation to handle routine tasks.
• Human in the loop: maintaining oversight, compliance and professional judgement.
• Success: defining what good AI adoption looks like beyond implementation.

As AI agents and automation take on more routine administrative work, payroll and HR professionals will spend more time on oversight, governance and judgement.

In practice, that means:

• Reviewing AI-generated outputs
• Managing compliance and governance
• Applying professional judgement
• Driving strategic decision-making
• Measuring productivity and business outcomes

Rather than removing people from the process, AI is expected to elevate the role of human-in-the-loop decision-making, especially where compliance, risk and employee outcomes are concerned.

While most respondents expect gradual rather than transformational change, 38% of organisations are actively planning, implementing or discussing AI investment, a sign that momentum is building. The discussion closed with a forward-looking question: what will payroll and HR look like by 2028?

The answer is still unfolding, but one thing is becoming clear: the conversation is no longer about if, but when. The real turning point isn’t when organisations deploy AI. It’s when they unlock its value.

The future of payroll won’t be shaped by technology alone. It will be shaped by the decisions organisations make today. See how Access Payroll Solutions is helping organisations prepare for the next era of payroll.