An employer’s record-keeping obligations are important. However, because they are generally seen as fundamental or rudimentary (and because often reliance is placed on payroll software and applications to manage the obligations), some of the finer details are often forgotten or missed.
Here are some key things to remember about employee record-keeping.
1. General records
General employment records must contain:
- the employer’s name and ABN (if any)
- the employee’s name
- the employee’s commencement date
- the basis of the employee’s employment (full or part time and permanent, temporary or casual).
2. Pay records
Pay records must contain:
- the rate of pay
- gross and net amounts paid
- any deductions
- details of any loadings, penalties, allowances, bonus or incentive payments or other separately identifiable entitlements paid.
3. Leave records
Where there is an entitlement to leave (so, generally not in relation to truly casual employees) the record needs to include leave taken and the balance of the employee’s accrued entitlement.
Also, where an arrangement for cashing out leave exists, the employer must retain a copy of the agreement to cash out, a record of when the payment was made and a record of the rate of payment.
Obligations as to record-keeping for leave exist not only in the Fair Work Act 2009 (Act) but also in the long service leave legislation applicable in the relevant State. Required records for long service leave (which can, subject to State requirements, be required to be maintained in a prescribed form) may include the following
- date of commencement
- date first eligible
- adjusted date (if applicable)
- the period of leave taken (start and end dates)
- the number of weeks taken
- the rate of ordinary pay at time of taking leave
- payment details.
4. Superannuation contribution records
Where an employer must make superannuation contributions for an employee, unless the contribution is a defined benefit interest in a defined benefit fund, the record must contain details as to:
- the name of the fund and details (including the date) of any election made by the employee to have their contributions paid into that fund
- the amount of the contribution paid and the basis on which the employer became liable to make the contribution, and
- the date on which the contribution was paid and the period to which the payment relates.
5. Termination records
Where the employment has been terminated, the employer must keep records which contain information as to the manner in which the employment was terminated (i.e. by consent, summarily, on notice) and the name of the person who terminated the employment.
6. Records of individual flexibility arrangements
If an employer and an employee have agreed to an individual flexibility arrangement by reference to an award or enterprise agreement, a record of the arrangement must include a copy of the agreement and any documents relevant to terminating the arrangements.
7. Records as to guarantee of annual earnings
Where an employer has given a guarantee of annual earnings, the employer must make and keep records of both the guarantee and the date of any revocation of the guarantee.
8. Making records available
Employers must make copies of an employee’s records available at the request of an employee or former employee.
9. Retaining records
Employee records must be kept for seven years.
10. Employer non-compliance with record-keeping obligations
Perhaps the reason to remember the nine other key things, an employer who does not comply with its record keeping obligations risks being issued with an infringement notice under the Act. An infringement notice can be issued within 12 months after the day on which a contravention occurred.
Infringement notices carry significant fines for both companies and individuals and are issued on a “per infringement” basis. This is significant, because in the arena of record-keeping, chances are that if an employer “gets it wrong” for one employee, they get it wrong for all employees – and the fine can be multiplied by the number of employees in respect of whom the employer got it wrong (and potentially also, by the number of occasions on which the employer got it wrong – which in a cyclical payroll context could amount to…a lot).
Is your business getting it right?
For advice or assistance in understanding your obligations, please contact the team here at Emplawyer.
