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If you received this error message, you must set up Xero to manage your payroll. The minimum requirement to connect to ClubsHR is to select your Organisation Type in Xero by going to your Organisation Details considering the Organisation Types supported in ClubsHR. Once you have chosen the Organisation Type in Xero, you can successfully connect Xero to ClubsHR. However, we recommend you take the time to set up Xero for payroll using their payroll dashboard.
Xero Payroll dashboard: https://payroll.xero.com/Dashboard/Details
They also have the following article: https://central.xero.com/s/article/Prepare-for-payroll-AU