Paying Workers – Compliance – Record Keeping

As mentioned in last week’s blog, when it comes to paying your staff, it is really important that you get things right, or as close to as possible.  This also includes maintaining correct records so that if you get audited at any stage the process is easy and you also have all the information that you are using to make the decisions you have made around a staff members pay.

The Law

Under the Fair Work Act 2009 employers who engage employees under relevant Commonwealth Workplace laws are required to:

  • Make and keep accurate and complete records for all of their employees (eg. Time worked and wages paid)
  • Issue payslips to each employee

Your Obligations

The Employee Records must:

  • Be in a form that is readily accessible to a Fair Work Inspector
  • Be in a legible form and in English
  • Be kept for seven years
  • Not be altered unless for the purposes of correcting an error
  • Not be false or misleading to the employer’s knowledge

They are to be kept private and confidential, but access to them can be given to the following people:

  • The employee (or former employee once they leave)
  • The employer
  • Relevant payroll staff
  • Fair Work Inspectors
  • Organisation Officials such as Trade Union

What information must be kept.

We mentioned a lot of thing in last weeks’ blog – Paying Workers – Compliance – Staff Personnel File – all of these need to be kept under the General Records, but you also need to keep further information.

  • Pay Records
    • Pay rate
    • Gross & Net amounts paid
    • Deductions taken
    • Details of incentive-based payments
    • Bonus’s
    • Loadings
    • Penalty rates
    • Allowances

These pay records are in your payroll program that you use, so don’t stress about having to put them somewhere else.  As long as you keep your payroll program backed up after each pay process you should be fine J

  • Hours of work
    • For casuals or irregular part time employees you will need a record of the hours worked for each shift
    • For part time and full time regular employees you will need a record of the overtime hours worked each day
    • Or a copy of a written agreement if the employer and employee have agreed to an averaging of the employee’s work hours

If you use timesheets then these are a good way of keeping the hours your casuals or irregular part timers worked, these timesheets will then be entered into your payroll program, records of overtime can be kept the same way.  The copy of the written agreement to average the employee’s hours can be kept in their Staff Personnel File.

  • Leave
    • Details of any leave taken
    • Details of how much leave an employee has
    • Details of any annual leave that has been cashed out – this needs to be in a form of a written agreement and it must state:
      • The amount of leave that was cashed out
      • Amount that was paid
      • When the payment was made
    • Details of any annual leave that is taken in advance – this needs to be in a form of a written agreement and it must state:
      • The amount of leave taken
      • The day the leave has started

The Annual leave taken and available is recorded in your payroll program, so you don’t need to keep this anywhere else unless you want to, once again, make sure you back up your payroll program each time you have processed a pay.  The agreements for cashing out annual leave and taking annual leave in advance will need to be held in your Staff Personnel File.

  • Superannuation
    • Amount paid
    • Period it was for
    • Date paid
    • Name of super fund it was paid to
    • Details of the superannuation choice – this is just the SuperChoice form

What I do for Super records is, print the report from the payroll program, once I have logged into the Super Clearing House and have lodged the super, I then print the report from the clearing house and the payment details.  Then I log onto the bank and make the payment and print the payment receipt. These are all then put into a folder called Superannuation.  You could scan them and put them into an electronic file if you want, or maybe not even print them, just save them to an electronic file. J

  • Individual Flexibility Agreements
    • If an Individual Flexible Agreement has been made between the Employer and Employee, you must keep the following:
      • A copy of the written agreement
      • A copy of any notice or agreement to terminate the flexibility agreements

These can be kept in the Staff Personnel File as well; the staff member should also have a copy for themselves.

  • Guarantee of annual earnings
    • Guarantee of Annual Earnings is basically a Salary. Your staff member is employed, instead of on an hourly rate, on an amount for the year, regardless of hours they work, for example $65,000 per year plus Superannuation.
    • If you make an agreement for a Guarantee of annual earnings you will need to keep a copy of the guarantee itself and the date the guarantee was cancelled (if it ever was). The best place to keep these is the Staff Personnel File.
  • Ending employment
    • Once employment has ended you still need to keep the records of your staff member for 7 years. But you also need to keep the details of the ending of the employment:
      • How the employment was terminated eg. By agreement, summarily or in some other way (specifying details)
      • If notice was provided and if so how much
      • The name of the person who terminated the employment

Some of these details will be held in your payroll program when you process the termination, but others you will need to keep a record of in your Staff Personnel File.

  • Transfer of business
    • Where there has been a transfer of business, the old employer has to give the new employer records of any transferring employee.  The new employer also has to ask for employment records from the old employer for any transferring employee who becomes an employee within three months of the sale.
    • Both parties need to keep a copy, therefore, make sure you print records from your payroll program to hand over and also give them a photocopy of the Staff Personnel File.

If you have any questions about this or any other part of the HR/Payroll blogs that I have written recently, please email me or contact me on Facebook or Twitter.


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