Record keeping and pay slips: a refresher
Keeping accurate records of work and issuing payslips are two of the most important, yet often overlooked, obligations of an employer. It is imperative to maintain employee records for a multitude of reasons, for the benefit of both employee and employer.
Adhering to the obligation of creating and maintaining accurate employee records (eg, time worked, wages paid) and issuing payslips to each employee is critical as it proves employees have been receiving the correct wages and entitlements for their employment.
By following the record-keeping requirements of the Fair Work Act 2009, employers are fulfilling their statutory duty as well as mitigating risk should an employee later allege that they have not received their minimum entitlements.
In the current climate, the importance of creating and maintaining accurate employee records has increased.
To manage the impacts of the COVID-19 pandemic on practice operations, employers have had to consider a multitude of options, such as requesting employees take annual leave, long service leave, and, regrettably, making positions redundant.
Accurate employee records allow employers to quickly review their employees’ leave balances to ascertain whether it is a viable option to ask employees to take some of their leave.
Similarly, it allows employees to see how much leave they currently have owing should they feel the need to take some time away from work.
Furthermore, in the event that employment ends, it makes the process of calculating and processing an employee’s final pay much simpler and minimises the possibility of disputes arising around entitlements owing.
What are the record-keeping requirements?
Employee records must:
- be easily accessible for review/inspection by authorised parties (eg, the employer, the employee, staff responsible for payroll, Fair Work inspectors)
- be written in an easy-to-understand format
- not be altered unless to correct an error
- be true and accurate to the employer’s knowledge
- be kept for seven years.
As a general rule, employee records are strictly confidential and only authorised parties (which include the examples listed above) have the right to access and review these records.
Should there be reasonable suspicion that an employer has contravened industrial legislation, additional parties (eg, trade unions) may have the authority to inspect records (subject to additional regulation) to ascertain whether illegal activity has occurred.
What types of records must employers create and maintain for their employees?
There are numerous types of records that employers must keep in relation to their employees. The Fair Work Ombudsman provides recommendations of what each type of record should contain at minimum.
General employment records
General employment records must include:
- the employer’s name
- the employer’s Australian Business Number if applicable
- the employee’s name
- the employee’s starting date
- the type of employment (eg, full-time, part-time or casual).
Pay records must include:
- the rate of pay the employee received
- the gross and net amounts paid (specifying the deductions made from the gross amount)
- specific information of any incentive-based payments, bonuses, loadings, penalty rates or other separately identifiable entitlements paid.
Hours of work records
Records that report on an employee’s working hours must include:
- a record of all hours worked by the employee—for employees with irregular hours (eg, casuals)
- a record of the number of overtime hours worked by the employee each day, or the starting and finishing times of overtime hours worked—for employees with set hours
- a copy of a written agreement made between an employer and their employee to take time off in lieu (TOIL) of being paid for overtime*
- a copy of a written agreement made between an employer and their employee to average their hours over a set period.*
For employees who are entitled to paid leave, records must specify:
- leave taken (if any)
- employees’ leave balances.
If an agreement has been made to take annual leave in advance* (ie, annual leave is granted before the employee has accrued the entitlement), an employer must draw up an agreement which states the amount of leave being taken in advance, and the date leave is to commence.
Superannuation contributions records
If an employer is required by law to make superannuation contributions to an employee, a record must be created which includes:
- the amount of the contributions made
- the dates on which each contribution was made
- the period over which the contributions were made
- the name of the fund to which contributions were made
- the basis on which the employer became liable to make the contribution, including a record of any election made by the employee (including the date) to have their super paid into a particular fund.
Where employment has been terminated, a record must be created and specify:
- the manner in which the employment was terminated (eg, resignation, dismissal (with notice), instant dismissal or any other manner, including details)
- if notice was provided and, if so, how much
- the name of the person who terminated the employment.
Depending on the circumstances, additional record-keeping obligations may apply.
In summary, creating and maintaining accurate time and wages records is critical in ensuring that the Fair Work Act 2009 (and other relevant legislation) is adhered to, and also in helping to avoid disputes about whether an employee has received their minimum entitlements.
*Such an agreement may only be made if the applicable award/agreement contains provisions permitting such an arrangement. The Health Profession- als and Support Services Award 2020 contains provisions allowing employ- ers and their employees to agree for the employee to take annual leave in advance. For further advice, contact the HR in Practice service (available to APA Business Group Premium Principal members).
>> The HR in Practice specialist workplace relations and work (occupational) health and safety advisory service is operated by Wentworth Advantage. APA Business Group Premium Principal members can contact the HR in Practice service by phone, email and online chat Monday – Friday 8:30am – 5:30pm AEST, and can visit here to access the full suite of online resources.
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Disclaimer: The material contained in this publication is general comment and is not intended as advice on any particular matter, nor should it be relied upon as a substitute for legal or professional advice. Wentworth Advantage Pty Ltd expressly disclaim all and any liability to any persons whatsoever in respect of anything done, or omitted to be done, by any such person in reliance whether in whole or in part upon any contents of this publication.
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