Employer obligations extend far beyond just paying wages to an employee. The Fair Work Act 2009 and Fair Work Regulations 2009 outlines all the different types of records that employers should keep under Fair Work Legislation.
This forms part of Fair Work Australia’s payroll compliance framework and therefore, records must:
- Be readily accessible to a Fair Work Inspector
- Be in English and legible
- Be kept for seven years
- Mustn’t be changed or altered for any reason other than to correct an error
- Mustn’t be false or misleading to the knowledge of the employer
Unfortunately, many business owners don’t fully understand their obligations and consequently end up being penalised for contraventions with infringement notices. For individuals, this can be up to $1260 per contravention and for corporations $6300.
However, employers who are found to be part of systemically contravening fair work legislation can face much more severe penalties with $126,000 per contravention for individuals and $630,000 per contravention for corporations. There are also potential criminal offences that fall within this legislation for those that knowingly produce false or misleading information.
The point? Ensure you treat recordkeeping with the attention it deserves.
As we move further into the digital age, the pressure for employers to meet their obligations becomes more and more pronounced. As payroll consultants, we’ve noticed that poor recordkeeping is often a major red flag when conducting audits on a client’s payroll processes.
So, what are the types of records an employer should keep under Fair Work legislation?
- Employer name
- Employer Australian Business Number (ABN) (if any)
- Employee’s name
- Employee’s commencement date
- The capacity of employment of the employee (full-time, part-time, casual, permanent or temporary)
This can be in the form of a contract or kept on your cloud payroll software.
- Rate of pay made to the employee
- Both the gross and net amounts paid as well as any other deductions made from the gross amount paid
- Further details indicating any incentive-based payments (commissions or bonuses), loading and penalty rates, or other monetary allowances or entitlements paid
This can be kept in the form of paper payslips or digitally produced ones using cloud payroll software, which can be both automatically generated and maintained as records for the full seven years.
Both a paper or a digital copy is acceptable. However, creating manual payslips can be an incredibly tedious process and therefore, we recommend cloud payroll software that will automatically generate and distribute payslips to your employees.
Employees can also access their digital payslips at any time using employee self-service features that can drastically reduce time wasted on payroll staff members when employees misplace or don’t have a copy of their payslip.
Payslips must contain:
- Employer’s name and ABN
- Employee’s name
- The date the payment was made and what pay period it covers
- Gross and net amounts of payment
- Any loading, bonuses, incentive-based payments or other monetary entitlements paid
- Whether the employee is paid an hourly or annual rate of pay including the calculations on the amount of payment made at each rate
- Any deductions made which should include the name of the fund of each deduction (for example, HELP repayments, reimbursements or tax withholdings)
- Superannuation contributions with the name and amount contributed to the superannuation fund
- Hours worked by casual or irregular part-time employees with guaranteed pay rates
- Overtime hours worked each day if a penalty rate or loading applies
- Annualised salaried employees need time and attendance records for certain industries
- Written agreement between the employer and employee for taking time off in lieu of being paid for overtime (time in lieu)
- Written agreement between the employer and employee on averaging of the employee’s work hours
- Timesheet entries need to present start and end times, as well as breaks to enable an accurate audit of meeting award conditions
For businesses that use integrated cloud payroll software to track time and attendance, these hours of work records are automatically maintained and easily accessible at any time.
At times, if an employee is taking annual leave in advance of leave being accrued, a copy of the agreement must be kept indicating:
- Amount of time taken on leave in advance and the dates the leave is taken
- Signatures of both the employee and employer
In cases where an employee and employer agree to cash out an amount of accrued leave, the employer must keep records of:
- An agreement outlining amount of leave cashed out
- Transaction receipt of the payment made indicating the date and amount paid
Both paper and digital records can be kept.
We recommend using employee self-service with cloud payroll software that allows employees to submit requests through your company payroll portal. The entire process is easy, secure and automatically documented on the system that can be accessed at any time.
- Contribution amount made and the name of the fund it was made to
- The date the contribution was made
- The period the contribution covers
- Documentation of the fund elected by the employee in which the contributions are made to
With employees all having their preferred funds and employers having to calculate each prospective employees’ contribution amounts, this can quickly become very difficult and confusing.
However, if you use an approved payroll software with superannuation automation capabilities, this can both improve the accuracy and efficiency of your superannuation contribution process.
- The nature of the termination whether it was by consent, resignation (notice) or any other manner
- Whether notice was provided and how much notice was given
- The name of the employee whose employment was terminated
It’s no wonder that business owners often find themselves in hot water if one particular aspect isn’t met.
This is why we believe in moving towards a digital solution such as cloud payroll software to cover all aspects of recordkeeping. With all the different types of records an employer needs to keep under Fair Work obligation, cloud payroll software are purpose-built to help improve recordkeeping ability of business owners.
Here are some of those benefits:
- Automation in producing and distributing payslips
- Automation in accrual, payout and deduction of leave entitlements
- Secure storage of confidential and private records
- Employee self-service functionality to minimise manually handling of employee requests
- Improved efficiency with superannuation contributions through super clearing houses
- Easily accessible and searchable information in the event a Fair Work Inspector requests documentation
- No physical storage requirements for recordkeeping reasons, all records are kept securely on cloud servers
- Integration with employee hiring, onboarding, rostering and time and attendance tracking - minimisation of manually handling in all aspects of workforce management
- No physical timesheets are required if using cloud payroll software in conjunction with time and attendance technology
It’s not humanly possible for any one person to be able to guarantee that all aspects of recordkeeping legislation are complied with, which is why it’s all the more important to automate this process to maximise compliance and to improve payroll efficiency.
Management of payroll is a massive undertaking that many businesses underestimate and commonly run in a very inefficient manner, which we’ve written about extensively.
Our expertise lies in our ability to match you with the right cloud payroll system that’s most suitable for the needs of your business. Beyond this, we help with the implementation, training and support required for you to go-live and transition to a cloud payroll software seamlessly.
If you’re interested in seeing how we can help your business make this leap, get in touch with us to find out how we can help you today.
