Understanding your employee record-keeping requirements, and the cost of non-compliance

On 15 September 2017, the Fair Work Ombudsman introduced increased penalties for employers who breach record-keeping requirements. This change comes following approximately two-thirds of the Fair Work Ombudsman’s court cases, last financial year, involving alleged record-keeping or pay slip contraventions. It is hoped that with penalties now being doubled, employers will be further deterred from directly or indirectly making such contraventions, and will commit to ensuring they understand their requirements from the outset.

While the majority of employers are aware that employee records must be retained for at least seven (7) years, the inclusions and level of detail of the records is generally where employers appear to be dropping the ball.  

Firstly, it is important that all records must be: legible, in English, readily accessible, and only changed if correcting an error (and this must be clearly identifiable). As a minimum, timely and accurate records must be made and maintained regarding the following:

  • The employment relationship between the employer and employee - generally contained within an Employment Contract and covering the following information, for example: names of the parties, ABN/s of parties, employment status and position, commencement date etc; and also (if applicable) documentation regarding how/why and when then relationship ended 
  • Pay - pay rates and payments made (incl breakdown e.g. bonus, loadings, penalty rates, allowances, leave payments etc.), payslips
  • Hours of work - start and finish times, overtime hours, time in lieu, rosters
  • Leave - accruals, dates and amounts of leave taken, cashed out arrangements
  • Superannuation - date, amount and pay period of contributions made, salary sacrifice details and payments
  • Individual Flexibility Agreements - the written agreement (including start and end date and detail of the provisions)

Where records fail to meet the above briefly outlined requirements (or the records are false or misleading), employers are exposed to the risk of infringement notices and penalties from the Fair Work Ombudsman. Not to mention the potential court fees and legal costs should the Ombudsman be successful in escalating the matter to court hearing.  

To assist employers in mitigating these risks, the Ombudsman has recently released a new online training course available from the Online Learning Centre on their website - the course is titled, "Record-keeping and Payslips". It is well worth the time for employers to take a moment and have a look at this course.  

It should also be noted that in addition to the above requirements, employers should always keep a separate Confidential Employee File that clearly document all processes undertaken with an employee and relating to the following "areas":  

  • performance appraisal and management;  
  • discipline;  
  • workplace investigations;  
  • workers compensation and return-to-work;  
  • variations of contract;  
  • medical / health;  
  • work health and safety;
  • grievances; and  
  • consultation.

If you are unsure if you are fulfilling your record-keeping requirements, have identified an error in your record-keeping, or are having trouble identifying the cause or impact of a record-keeping error, one of our experienced Consultants will be able to assist you in solving your problem and ensuring compliance. Email us at solve@fiveseven.com.au

Jane McConville

With a passion for strategic thinking, Jane believes ardently in collaborating with clients to solve their problems through specific, tailored, and realistic advice that supports....

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