In a timely reminder to employers about record keeping obligations, the Federal Court has penalised two employers and their director over $37,000 for failing to keep proper employee records. In that case, Justice Barker said:

the contraventions in this case should not be seen as mere contraventions of some lower order. The failure to maintain records truly strikes at the very foundation of the regulatory scheme which is designed to ensure that employees are paid their legal entitlements[1].

The Fair Work Act requires that employers keep certain employment related records. These records must be kept for seven years and must be in English, legible and readily available to an inspector. Key records that employers must keep include:

  • General: details of the employer, the employer’s ABN (if applicable), the employee’s name and start date and whether the employee is a full-time, part-time or casual employee.
  • Pay: details of the employee’s pay rate, gross and net payments to the employee, any deductions made from the employee’s pay, details of any separately identifiable amounts (such as incentives, commissions, allowances, loadings and penalty rates) and details of superannuation contributions (including the amount paid, the date of payment and the name of the superannuation fund).
  • Hours: details of hours worked for casual and irregular part time employees, records of overtime worked and a record of any written agreement dealing with averaging hours of work.
  • Leave: details of accrued leave and leave taken, and a record of any written agreement dealing with cashing out annual leave.
  • Termination: details of whether termination was by consent, with notice, summarily or otherwise, and the name of the person who acted to terminate the employment.
  • Pay slips: pay slips should be issued to employees within 1 working day of payment and must include the name of the employee and employer, the employer’s ABN, the date of payment, the pay period, details of gross and net pay, the employee’s ordinary hourly rate and number of hours worked, details of any separately identifiable amounts (as described above), details of any deductions and details of superannuation contributions.

Employers who fail to keep the required records and persons involved in that failure are exposed to penalties for contravening the Fair Work Act. Maximum penalties under the Fair Work Act are currently up to $54,000 per breach for a corporate entity and up to $10,800 for individuals who are involved in a breach, although these penalties will increase to a maximum of $63,000 and $12,600 respectively from 1 July 2017. This is a timely reminder to employers to review their record keeping practices and take steps to rectify any non-compliance.