Employee Record Requirements

A. Introduction

One area where employers can easily run into problems is failing to keep proper records for their employees in accordance with legislative requirements.  The issue most commonly arises when a former employee makes a claim for unpaid entitlements.  Government agencies at a federal and state level are able to provide assistance to employees in these claims and may take legal action (and seek penalties) against employers.  Normally the first step taken by these agencies is to require the employer to provide a copy of the employee’s time and wage records.  If the records cannot be produced or have not been kept properly, there are two likely consequences:

  1. the employee’s allegations about hours and days worked is likely to be accepted over any employer response in the absence of documentary evidence; and
  2. the employer may be fined for failing to keep proper records and may have penalty proceedings taken against them for failing to pay award entitlements to the employee.

Given that these fines and penalties can run into tens (and sometimes hundreds) of thousands of dollars, it is wise for employers to spend some time ensuring they comply with the law.  In a worst case scenario, criminal proceedings can be taken against an employer and its directors and officers for wage theft.

In summary, under the Fair Work Act, there are requirements for details to be kept for all employees relating to:

  • the identity of the employee and employer, the nature of the employment, the date of commencement and the name of any applicable employment instrument such as an Award, Enterprise Agreement, Individual Flexibility Arrangement or award annualised wage agreement;
  • any written agreement for averaging of the employee’s hours of work;
  • pay details;
  • annual leave;
  • superannuation contributions; and
  • termination of employment.

Details of hours worked need to be kept for an employee if they are liable to be paid overtime or penalty rates or they are a casual employee.  Pay slips in written or electronic form must be provided to each employee for each pay period containing specified information.  The Fair Work Act also has provisions relating to the alteration and correction of records, false or misleading entries in records and inspection and copying of employee records.

Records of hours worked do not generally need to be kept for award free permanent employees but employers should have a system in place to ensure that employees do not work (voluntarily or otherwise) unreasonable additional hours in their employment.  Employers should also ensure that employment contracts for award free employees reflect that some additional hours may be included in their annual salary.

Further information and template documents are available from the federal Fair Work Ombudsman website.

B. Employee Record Keeping Requirements under the Fair Work Act

1. General requirements

Under the Fair Work Act and the Fair Work Regulations an employer must:

  • make and keep employee records for 7 years;
  • ensure the record is not intentionally false or misleading;
  • ensure the record is:
    • in legible form in the English language;
    • in a form that is readily accessible to a workplace inspector.

As a bare minimum an employee record must contain the following details:

  • name of the employer;
  • name of the employee;
  • whether the employment is full time or part time;
  • whether the employment is permanent, temporary or casual;
  • the date on which the employment commenced;
  • the employer’s ABN (Australian Business Number).

An employee or former employee is allowed to interview the employer at any time during ordinary working hours about an employee record the employer has made or will make.

2. Pay detail requirements

The employee record must contain details of the:

  • rate of remuneration paid to the employee;
  • gross and net amounts paid to the employee; and
  • deductions made from the gross amount paid to the employee;
  • Amount and basis for calculation of:
    • incentive-based payments and bonuses;
    • loadings and penalty rates; and
    • any other monetary allowance or entitlement.

3. Requirements for details of hours worked

If a penalty rate or loading (however described) must be paid for overtime worked by an employee, their record must state:

  • their daily starting and finishing times; and
  • the number of overtime hours worked by the employee during each day.

The record must contain a record of the hours worked by the employee if the employee is a casual or irregular part-time employee.

4. Record of reasonable additional hours

Where the employer and the employee have agreed in writing to an averaging of the employee’s hours of work (over a specified period of no more than 26 weeks for non award/enterprise agreement employees)the employer must keep a copy of the written agreement.

5. Leave

The employee record must contain details of:

  • any leave taken by the employee; and
  • a running balance of the employee’s entitlements at any given point in time.

If there is agreement to cash out an accrued amount of leave, the employer must keep a copy of the agreement along with details of the rate of payment for the amount of leave cashed out and when the payment was made.

This requirement is also subject to applicable industrial award/enterprise agreement conditions.

6. Superannuation contributions

The employee record must contain:

  • the amount of the contributions made;
  • the period over which the contributions were made;
  • the dates on which the contributions were made;
  • the name of any fund to which the contributions were made; and
  • the basis on which the employer became liable to make the contribution including a record of any relevant election about the fund to which contributions are to be made and the date of the election.

7. Termination of employment

The record must contain details of whether the employment was terminated by consent, by notice, summarily or in another manner and the name of the person who acted to terminate the employment.

8. Other record keeping requirements

The employer must keep a copy of any award/enterprise agreement based individual flexibility arrangement along with any notice or agreement about termination of the arrangement.

If a guarantee of annual earnings is given under the Fair Work Act, the employer must keep a copy of the written guarantee and any revocation of the guarantee.

There are detailed requirements for record keeping for old and new employers in the event of a transfer of business occurring.

An employer must not alter a record other than to correct an error.  An error must be corrected as soon as the employer becomes aware of the error and the nature of the error must be recorded with the correction.

A person must not make, or make use of, an entry in any record if the person knows the entry to be false or misleading.

9. Inspection and copying of records

An employer must make a copy of a record available in legible form for inspection and copying on request by the employee, or former employee, to whom the record relates, or by request or requirement of a workplace inspector.

The copy must be made available at the employer’s premises within three (3) business days or by posting a copy within 14 days of receiving the request.  If the records are not kept at the employer’s premises, then the employer must comply with the request as soon as practicable.

An employee is also entitled to ask an employer where employee records relating to them are kept.

Fair work inspectors have wide ranging powers to require the production of employment documents and to seek information from employers.  There are very significant penalties for an employer failing to do so.

C. Employee Pay Slip Requirements

The Fair Work Act requires an employer to give a pay slip to each employee within 1 working day of paying the employee for their work.  Employers must not give a pay slip that is known to be false or misleading.  It is accepted that pay slips may be issued in electronic or hard copy form.

Pay slips must contain the following information:

  • the name of the employer;
  • the name of the employee;
  • the date on which the payment to which the pay slip relates was made;
  • the period to which the pay slip relates;
  • the gross amount of the payment;
  • the net amount of the payment;
  • any amount paid that is an incentive-based payment, bonus, loading, monetary allowance, penalty rate or other identifiable entitlement;
  • the employer’s ABN (Australian Business Number);
  • any deductions made from the employee’s pay including the name and number of the fund or account into which the deductions were paid;
  • if the employee is paid at an hourly rate of pay:
    • the ordinary hourly rate;
    • the number of hours in that period for which the employee was employed at that rate; and
    • the amount of the payment made at that rate;
  • if the employee is paid at an annual rate of pay, that rate as at the latest date to which the payment relates;
  • if the employer is required to make superannuation contributions for the employee’s benefit:
    • the amount of each contribution made or which the employer is liable to make for the employee during the period to which the pay slip relates and the name and number of any fund to which that contribution was or will be made.  (Employers who contribute a defined benefit interest in a defined benefit fund do not need to fulfil these reporting requirements in respect of superannuation contributions.)

D. Other Points to Note

As a general rule, employers cannot deduct amounts claimed to be owing by employees from their wages without their permission.  There are some exceptions to this general rule.  For instance, if an employee terminates the employment relationship and does not provide the required notice, the employer may deduct wages for the notice period from any amount due and owing to the employee.

Employers and employees should keep in mind that an applicable industrial award or enterprise agreement may impose additional record keeping requirements.  Additional record keeping requirements may exist under separate legislation, such as workers compensation legislation.

The employee records set out in this factsheet are not subject to general privacy legislation requirements.

These are minimum requirements only and best practice may entail more detailed record keeping.