A Timely Reminder about the Importance of Keeping Records

A recent case against the University of New South Wales (UNSW) by the Fair Work Ombudsman highlights the critical importance of maintaining accurate employee records. UNSW faces allegations of serious contraventions due to inadequate record-keeping practices, potentially resulting in penalties of up to $66,600.00 per contravention, or up to $666,000.00 for serious contraventions. This case underscores the need for all Australian employers to understand and adhere to record-keeping obligations to avoid costly legal consequences and safeguard employee rights.

Reminder of obligations

Under the Fair Work Act 2009 (Cth) (“FWA”) and the Fair Work Regulations 2009 (Cth) (“the Regulations”), Australian employers must make and keep employee records for at least 7 years. This article outlines the key requirements and obligations for Australian employers regarding record-keeping under the Fair Work Act and its accompanying Regulations.

Maintaining accurate employment records serves multiple purposes, all aimed at ensuring transparency, fairness, and compliance with labour laws. Some of the main reasons for record-keeping include:

• Compliance: Employers must demonstrate compliance with employment laws, such as minimum wage, working hours, leave entitlements, and termination procedures. Having detailed employee records can assist in promptly identifying payroll mistakes and rectifying these before larger issues emerge.
• Dispute Resolution: In case of disputes or complaints, accurate records can serve as crucial evidence to support either party’s claims.
• Audits and Inspections: Government agencies like the Fair Work Ombudsman may conduct audits and inspections to ensure employers are following the law, and records are essential in such cases. Having accurate, up to date and detailed records will assist in avoiding penalties for doing the wrong thing.
• Employee Rights: Records provide employees with a means to verify their entitlements, such as leave balances and payment history. It also assists with keeping track of employee details.

General record keeping requirements

Employee records are private and confidential. As such, only the employee, their employer, and relevant payroll/human resources staff should have access to these records. The exception to this are Fair Work Inspectors who may access employee record to determine if there has been non-compliance with any relevant Commonwealth laws.

Generally, employee records must:

• Be in a form that is readily accessible to a Fair Work Inspector
• Be in a legible form and in English (preferably plain English).
• Be kept for at least 7 years.
• Not be altered unless for the purposes of correcting an error.
• Not be false or misleading to the employer’s knowledge.

What records must I keep as an employer?

The obligations relating to the form, content and types of records that need to be made, maintained and kept by employers are detailed in Division 3 of the Regulations. These requirements include:

1. General Employment Records: Employers must maintain detailed records for each employee. This includes information such as the:
   1. employer’s name and ABN (if any),
   2. employee’s name,
   3. employee’s commencement date,
   4. whether the employee is full-time or part-time; and,
   5. whether the employee’s employment is permanent, temporary or casual.
2. Pay Records: Employers are required to keep records of all payments made to employees. These records must include:
   1. The pay rates,
   2. The gross and net amounts paid,
   3. Any deduction made from the gross amount paid
   4. any additional entitlements, such as incentive-based payment, a bonus, a loading, a penalty rat or any other monetary allowance or separately identifiable entitlements.
3. Hours Worked: Employers must maintain detailed records for each employee, including the following:
   1. For casual and irregular part-time employees, a record of the hours that employee worked,
   2. For any other type of employee, the number of overtime hours worked each day, or when the employee started and finished working overtime hours,
   3. A copy of the written agreement if an employee and employer have agreed to the employee taking time off in lieu of being paid overtime worked (TOIL),
   4. A copy of the written agreement if the employer and employee have agreed to an averaging of the employee’s work hours.
4. Leave Records: Employers must track and record each employee’s leave entitlements, such as annual leave, sick leave, and any other leave types outlined in the Act as well as the balance of the employee’s leave entitlement from time to time. Where any agreement has been reached regarding:
   1. An employee taking annual leave in advance of an accrued amount of leave:
      1. A copy of the agreement signed by the employer and employee,
      2. The amount of leave taken in advance and the date on which the leave is to commence,
   2. An agreement to cash out an accrued amount of leave:
      1. A copy of the agreement,
      2. A record of the amount of leave to be cashed out and the payment to be made to the employee for it,
      3. The date on which the payment is to be made.

5. Superannuation Records: Records related to superannuation contributions, including the amount paid, the date of payment, and the employee’s chosen super fund, must be kept.
6. Individual Flexibility Arrangement (IFA) Records: Where an employer and an employee have agreed in writing to an individual flexibility arrangement in relation to a modern award or registered enterprise agreement, a record must include both:
   1. A copy of the agreement
   2. A copy of any notice or agreement terminating the IFA.
7. Guarantee of Annual Earning Records: Where an employer gives a guarantee of annual earnings under the FWA the employer must make and keep a record of the guarantee and the date of any revocation of the guarantee.
8. Termination Records: If an employee’s employment is terminated, the employer must make and keep a record of:
   1. Whether the employment was terminated by consent, notice, summarily or in some other manner,
   2. The name of the person who terminated the employment,
   3. If notice was provided and if so, how much.
9. Transfer of Business Records: Where there has been a transfer of business, the old employer is to transfer the new employer each employee record concerning a transferring employee.

Penalties for Non-Compliance

Failure to comply with record-keeping obligations can lead to severe penalties, including fines and legal actions. The Fair Work Ombudsman has the authority to investigate employers suspected of non-compliance and take appropriate action.

Case Study: University of New South Wales (“UNSW“)

In late September 2023, the Fair Work Ombudsman (“the Ombudsman“) announced that it had commenced legal action against UNSW in the Federal Circuit and Family Court of Australia. The Ombudsman alleges that for more than 4 years, UNSW have engaged in record keeping practices so inadequate that they made it difficult for the Ombudsman to identify whether employees had been underpaid. A number of these allege contraventions are considered serious contraventions under FWA as the Ombudsman alleges that they were committed knowingly and as part of a systemic pattern of conduct.  It is alleged that between 2017 and 2022 UNSW:

• Failed to make and keep records of hours, rates of pay and details of loadings and other entitlements owed to casual academic employees.
• Failed to include required information in pay slips such as basic information relating to pay rates and casual loading.
• Failed to pay staff wages at least monthly for all hours worked, with it alleged that some staff were paid certain parts of their entitlements several weeks or month after they actually performed the work.

The Ombudsman is seeking penalties against UNSW for the multiple alleged contraventions. Each contravention carries a penalty of up to $66,600.00 and up to $666,000.00 for serious contraventions.

Australian employers have clear obligations under the Fair Work Act and Fair Work Regulations when it comes to record-keeping. These obligations are in place to protect the rights and entitlements of employees and ensure transparency in employment practices. Employers should familiarise themselves with these requirements, establish robust record-keeping systems, and regularly review and update their records to maintain compliance with the law. Failure to do so can result in legal consequences that can be costly both financially and in terms of reputation.

If you are unsure of your obligations as an employer, contact Sarah Cappello, Partner and Joey Tass, Senior Associate