One of the conversations we often have with clients is the keeping of payroll records for all employees – i.e. timesheets, rosters, payslips etc.
A recent case against the University of New South Wales (UNSW) by the Fair Work Ombudsman (FWO) highlights the critical importance of maintaining accurate employee records.
UNSW faces allegations of serious contraventions due to inadequate record-keeping practices, potentially resulting in penalties of up to $66,600.00 per contravention, or up to $666,000.00 for serious contraventions.
This case highlights the need for all Australian employers to understand and adhere to record-keeping obligations to avoid costly legal consequences and safeguard employee rights.
Reminder of Obligations
Under the Fair Work Act 2009 (Cth) (“FWA”), you must, as an employer, make and keep employee records for at least seven (7) years.
Maintaining accurate employment records serves multiple purposes which are aimed at ensuring transparency, fairness and compliance with legislation- e.g:
- Compliance. As an employer, you must demonstrate compliance with legislation – e.g. minimum wage, working hours, leave entitlements and termination.
- Dispute resolution. Where there are disputes or complaints, accurate records can serve as crucial evidence to support either party’s claims.
Audits and inspections: The FWO often conducts random audits and inspections to ensure employers comply with legislation; records are essential in such cases.
- Employee rights: Records provide employees with a means to verify their entitlements – e.g. leave balances and payment history.
General Record Keeping Requirements
Employee records are private and confidential and should only be accessed by the employee, their employer and relevant payroll/human resources staff. The exception are the FWO inspectors who can access employee records at any time.
Generally, employee records must:
- Be in a form that is readily accessible to a Fair Work Inspector
- Be in a legible form and in English (preferably plain English).
- Be kept for at least 7 years.
- Not be altered unless for the purposes of correcting an error.Not be false or misleading to the employer’s knowledge.
What Records Must I Keep As An Employer
Division 3 of the Regulations details these requirements:
- Employers must maintain detailed records for each employee – e.g.
- employer’s name and ABN (if any),
- employee’s name,
- employee’s commencement date
- whether the employee is full-time or part-time; and,
- whether the employee’s employment is permanent, temporary or casual.
- Employers are required to keep records of all payments made to employees – e.g.
- The pay rates,
- The gross and net amounts paid,
- Any deduction made from the gross amount paid,
- Any additional entitlements, such as incentive-based payment, a bonus, a loading, a penalty rat or any other monetary allowance or separately identifiable entitlements.
- Employers must maintain detailed records for each employee, including the following:
- Casual and irregular part-time employees, a record of the hours that employee worked,
- Any other type of employee, the overtime hours worked each day and related start / finish times,
- Copy of the written agreement if where time off in lieu (TOIL) has been agreed.
- Copy of the written agreement where averaging of the employee’s work hours has been agreed.
- Employers must track and record each employee’s leave entitlements, such as annual leave, sick leave, and any other leave types outlined in the Act as well as the balance of the employee’s leave entitlement from time to time. Where any agreement has been reached regarding:
- An employee taking annual leave in advance of an accrued amount of leave:
- A copy of the agreement signed by the employer and employee,
- The amount of leave taken in advance and the date on which the leave is to commence,
- An agreement to cash out an accrued amount of leave:
- A copy of the agreement,
- A record of the amount of leave to be cashed out and the payment to be made to the employee for it,
- The date on which the payment is to be made.
- An employee taking annual leave in advance of an accrued amount of leave:
- Records related to superannuation contributions, including the amount paid, the date of payment, and the employee’s chosen super fund, must be kept.
- Where an employer and an employee have agreed in writing to an individual flexibility arrangement in relation to a modern award or registered enterprise agreement, a record must include both:
- A copy of the agreement
- A copy of any notice or agreement terminating the IFA.
- Where an employer gives a guarantee of annual earnings under the FWA the employer must make and keep a record of the guarantee and the date of any revocation of the guarantee.
- If an employee’s employment is terminated, the employer must make and keep a record of:
- Whether the employment was terminated by consent, notice, summarily or in some other manner,
- The name of the person who terminated the employment,
- If notice was provided and if so, how much.
- Where there has been a transfer of business, the old employer is to transfer the new employer each employee record concerning a transferring employee.
Penalties For Non-Compliance
Failure to comply with record-keeping obligations can lead to severe fines and legal actions. The FWO has the authority to investigate employers suspected of non-compliance and take appropriate action.
In late September 2023, the Fair Work Ombudsman (“the Ombudsman“) announced it had commenced legal action against the University of New South Wales (UNSW).
The Ombudsman alleges that, for more than 4 years, UNSW have engaged in record keeping practices so inadequate they made it difficult for the Ombudsman to identify whether employees had been underpaid.
Several of the alleged contraventions are considered serious contraventions as the Ombudsman alleges they were committed knowingly and as part of a systemic pattern of conduct. It is alleged that between 2017 and 2022 UNSW failed to:
- Make and keep records of hours, rates of pay and details of loadings and other entitlements owed to casual academic employees.
- Include required information in pay slips such as basic information relating to pay rates and casual loading.
- Pay staff wages at least monthly for all hours worked, with it alleged that some staff were paid certain parts of their entitlements several weeks or month after they performed the work.
The Ombudsman is seeking penalties against UNSW for the multiple alleged contraventions – i.e. a penalty of up to $66,600.00 and up to $666,000.00 for serious contraventions.
As an Australian employer, you have clear obligations under the FWA when it comes to record-keeping to ensure transparency in employment practices. You should:
- Familiarise yourself with these requirements,
- Establish robust record-keeping systems and
- Regularly review and update their records to maintain compliance with the law.
Failure to do so can result in legal consequences that can be costly both financially and in terms of your personal and business reputation.
If you are unsure of your obligations as an employer, contact Margaret Goody to discuss your query.
Source: Hunt&Hunt 26/09/2023
Akyra’s Key Takeaways
- The case against UNSW underscores the legal consequences of inadequate record-keeping practices for employers in Australia. In this case, UNSW is facing allegations of serious contraventions due to poor record-keeping, which could result in significant penalties, including fines of up to $66,600 per contravention or up to $666,000 for serious contraventions. This highlights the need for all Australian employers to understand and adhere to record-keeping obligations to avoid costly legal repercussions and protect employee rights.
- Under the Fair Work Act 2009 (Cth), Australian employers are required to make and maintain employee records for at least seven years. These records are essential for demonstrating compliance with various labor regulations, resolving disputes or complaints, and facilitating audits and inspections by the Fair Work Ombudsman (FWO). Accurate records also enable employees to verify their entitlements, such as leave balances and payment history.
- Employers need to be maintaining detailed records for each employee, documenting payments made to employees, tracking and recording leave entitlements, and keeping records related to superannuation contributions, among others. Non-compliance with these obligations can lead to severe fines and legal actions by the FWO.
Disclaimer – Reliance on Content
The material distributed is general information only. The information supplied is not intended to be legal or other professional advice, nor should it be relied upon as such. You should seek legal or professional advice in relation to your specific situation.