Best Xero Payroll Alternative for Australian Small Businesses in 2026

In March 2025, Xero discontinued its $15/month Payroll Only plan in Australia. Overnight, small business owners who just needed basic payroll were looking at $75 to $100 per month for Grow or Comprehensive plans — a fivefold increase for features most of them will never touch.

The backlash was immediate. Xero eventually bundled payroll back into its business plans in mid-2025, but the damage was done: the affordable entry point for small business payroll disappeared, and thousands of Australian business owners started looking for alternatives.

If that's you, here's what actually works.

Why Australian Small Businesses Are Leaving Xero Payroll

Xero builds solid accounting software. Nobody disputes that. But their payroll pricing tells you who they're building for — and it's not the café owner with three staff or the tradie paying one apprentice.

Here's what changed:

• March 2025: Payroll Only ($15/month), Starter, and Standard plans discontinued
• July 2025: New pricing — Grow at $75/month, Comprehensive at $100/month, Ultimate at $130/month
• The result: A business paying $15/month for basic payroll now pays a minimum of $75/month

That's before you factor in the ongoing frustrations: bank feed outages, the removal of classic invoicing (replaced with a clunky autosave interface), and a support model that works better over email than when you need someone on the phone during a pay run.

Top Xero Payroll Alternatives for Australian Small Businesses

Every option below handles PAYG withholding, superannuation at 12%, and Single Touch Payroll (STP) Phase 2 lodgements to the ATO — the non-negotiable baseline for Australian payroll compliance.

Payroller — Best Budget Option

Payroller is an Australian-built payroll platform designed specifically for small businesses priced out of Xero. Their free plan covers one employee on mobile. For up to four employees, it's $10.98/month — compared to Xero's minimum $75/month for equivalent functionality.

STP lodgements are included. Super calculations are automatic. The interface is stripped back and mobile-first, which is exactly what owner-operators need when they're doing payroll from the job site, not a desk.

Best for: Sole traders and micro businesses (1-4 employees) on a tight budget.

ClockOn — Free for 12 Months

ClockOn is offering a starter package that's free for up to 12 months (or 27 STP submissions, whichever comes first). That's a full year of payroll at no cost while you figure out whether you need something bigger.

It's Australian-made, handles award interpretation, and includes workforce management tools like rostering and time tracking. After the free period, pricing is competitive with other mid-market options.

Best for: Shift-based businesses (retail, hospitality, trades) that need rostering and payroll in one place.

Employment Hero — The Full HR Package

Employment Hero bundles payroll with onboarding, leave management, performance reviews, and HR document storage. It feels like overkill until you actually need to manage leave requests digitally or track probation periods across multiple hires.

Australian-founded, so Fair Work compliance is baked in rather than bolted on. Their compliance library tracks Modern Award changes faster than most competitors. Pricing starts around $6-8 per employee depending on modules.

Best for: Growing businesses (5-50 employees) that want payroll and HR from day one.

Reckon — Cheapest Full Accounting + Payroll

Reckon is the direct Xero competitor for businesses that actually need accounting software with payroll. Their entry-level plan starts at $16/month — 54% cheaper than Xero's equivalent tier. Every Reckon plan remains more affordable than Xero's middle tier.

They offer a dedicated payroll companion app for approving timesheets and running pays on mobile — something Xero still doesn't have as a standalone app. If you're switching from Xero and want something that looks and works similarly but costs less, Reckon is the closest match.

Best for: Businesses that need both accounting and payroll but can't justify Xero's pricing.

Easy Payslip — Simplest Setup

Easy Payslip does exactly what the name says. At $9.95/month for 1-4 employees, it handles payslip generation, STP lodgements, and super calculations without trying to be your accounting system.

No fluff. You enter hours, it calculates tax and super, you approve the run. The interface is deliberately simple — built for people who want payroll done in 10 minutes, not 10 tabs.

Best for: Micro businesses (under 10 employees) that want payroll handled and nothing else.

What If You Just Need Payslips?

Here's something most comparison articles won't tell you: if you're a sole trader paying yourself, or a micro-employer with 1-2 casual staff, you might not need payroll software at all.

The Fair Work Act requires you to issue payslips within one working day of payment. Those payslips must include your ABN, the employee's name, pay period, gross and net amounts, PAYG tax, superannuation details, and any loadings or allowances — each separately identified.

A payslip generator handles this without a monthly subscription. You enter the pay details, it calculates PAYG, Medicare levy, and super at 12%, and you download a compliant PDF.

PayslipMate generates Fair Work compliant payslips with automatic PAYG, Medicare, Super, and HECS-HELP calculations for all Australian states. No subscription. No accounting software. Just the payslip.

How to Choose the Right Alternative

Stop comparing feature lists. Start here:

1

How Many People Are You Paying?

Just yourself? A payslip generator is enough. Under 4 employees? Payroller or Easy Payslip. Growing team with shifts? ClockOn or Employment Hero. Need full accounting too? Reckon.

2

Do You Need Award Interpretation?

If your staff are on Modern Awards with penalty rates, casual loading, and allowances, you need software that handles that automatically. ClockOn and Employment Hero do this well. If everyone is salaried, simpler tools work fine.

3

What's Your Actual Budget?

Be honest. If $75/month for Xero makes you wince, there's no shame in that — it means you're the exact business these alternatives are built for.

Quick Comparison Table