Payroll is the one area where Australian small businesses can’t afford to get it wrong. Fair Work compliance, superannuation, STP Phase 2 reporting, and award interpretation are all non-negotiable. In 2026, three platforms dominate the conversation: Xero Payroll, MYOB Payroll, and KeyPay (now part of Employment Hero). Here’s how they compare.

At a Glance

	Xero Payroll	MYOB Payroll	KeyPay (via Employment Hero)
Best for	Xero accounting users	MYOB accounting users	Award-heavy businesses
STP Phase 2	✅ Yes	✅ Yes	✅ Yes
Award interpretation	⚠️ Basic	⚠️ Basic	✅ Advanced
Rostering	❌ No	❌ No	✅ Built-in
Pricing	Included in Xero plans	Included in MYOB plans	From ~AU$6/employee/mo
AI features	⚠️ Emerging	⚠️ Emerging	✅ AI award interpretation

Xero Payroll: Best If You’re Already on Xero

Xero Payroll is built into Xero’s accounting platform: if you’re already using Xero for bookkeeping, adding payroll is a natural extension. The integration is seamless: payroll journals post automatically, leave balances sync, and your accountant can access everything in one place.

Xero Payroll handles STP Phase 2, super guarantee calculations, leave management, and basic award rates. Where it falls short is complex award interpretation: if your business runs multiple Modern Awards with intricate penalty rates and allowances, you may find Xero’s payroll engine needs supplementing.

Best for: Businesses already on Xero with straightforward payroll needs (salaried staff, simple hourly workers).

MYOB Payroll: Best If You’re Already on MYOB

MYOB’s payroll offering is similarly tightly integrated with its accounting platform. MYOB has a long history in Australian payroll: it’s been handling local compliance for decades: and its newer cloud platform (MYOB Business) includes payroll as standard. Like Xero, it covers the basics well: STP2, super, leave, and standard pay rates.

MYOB has invested in AI features including automated data entry and anomaly detection in payroll runs. It also has a stronger presence in the mid-market with MYOB Advanced for larger businesses.

Best for: Businesses already using MYOB for accounting, particularly those in manufacturing, construction, and retail who are embedded in the MYOB ecosystem.

KeyPay: Best for Award-Heavy and Shift-Based Businesses

KeyPay (now embedded in Employment Hero) is the standout choice for businesses with complex payroll needs: hospitality, retail, healthcare, construction, and anyone running multiple Modern Awards. Its AI-powered award interpretation engine automatically applies the correct rates, penalty loadings, and allowances based on when and where an employee works.

KeyPay also includes built-in rostering and time-tracking, which means your roster flows directly into payroll with no double-entry. For shift-based businesses, this alone can save hours per pay run.

Best for: Hospitality, retail, healthcare, and any business with complex awards, shift work, or penalty rates.

The Verdict

Already on Xero, simple payroll: Stick with Xero Payroll
Already on MYOB, happy with it: MYOB Payroll does the job
Award-heavy, shift work, or scaling fast: KeyPay / Employment Hero is worth the switch

If you’re starting fresh and not locked into either accounting platform, KeyPay’s award automation and rostering integration makes it the most capable payroll engine for most Australian small businesses in 2026.

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