Filing out time sheets is boring! No one likes doing it, but not completing them substantively increases the risk for an employer being unable to defend a claim for underpayment of wages and a civil penalty (fine) under the Fair Work Act, 2009 (the Act).
The Act now provides that in a claim for underpayment of wages there is a reverse onus on the employer to disprove the claim. What this means in practice is if an employer has not kept accurate time and wages records, including pay slips, it will be very difficult to defend a claim for underpayment of wages, particularly where the claimant provides a record of hours allegedly worked. Where an employee provides records (which do not need to be formal), for example it could be notes in a diary or notes kept on a mobile device, this record will be treated as accurate unless the employer can prove otherwise. It is not difficult to see how this creates substantive risk for employers who are not able to prove via time sheets and pay slips the actual hours worked and payments made.
To comply with the Act and provide a solid defense to a spurious claim for underpayment, employers must keep accurate employee records and must retain them for 7 years. This time frame is important because claims for wage underpayments can be made going back 6 years from the date of the claim.
It is a fallacy that for employees engaged as salaried employees, employers are not required to keep the same time and wage records as other Award based full-time, part-time and casual employees. Time and wage records must be maintained for all employees and any failure to do so would be a breach of the Act.
In addition to time records, it is also imperative that employers provide accurate and compliant pay slips for all employees. The Fair Work Regulations set out the specific requirements for a pay slip and strict compliance is required. That is, although there is some latitude in relation to the form of a pay slip, there is no latitude when it comes to the mandatory inclusions. To check if your organisations pay slips are compliant the download the checklist here.
If you require advice or assistance with your record keeping requirements, contact us on mazarshr@mazars.com.au or 3218 3919.
