32,496 reasons why you should be keeping records and providing pay slips to your employees
Posted on September 10, 2015
A recent decision of the Federal Circuit Court of Australia has seen a company fined $29,640 for failing to keep employee records and failing to provide pay slips in accordance with the Fair Work Act 2009 (FW Act), as well as the company’s director being personally fined $2,856 for her involvement in the pay slip breaches – amounting to $32,496 in total!
The case of Fair Work Ombudsman v Grandcity (GW) Travel & Tour Pty Ltd & Anor [2015] FCCA 1759 involved the Fair Work Ombudsman (FWO) bringing proceedings against a travel agency business based in Melbourne in relation to a number of breaches of the FW Act. Amongst other things, the FWO alleged that the employer had failed to keep appropriate records and provide pay slips to one of its employees between January-September 2013 in accordance with the FW Act.
Section 535 of the FW Act requires that an employer must make, and keep for 7 years, employee records. The records must specify:
- The employer’s name;
- The employee’s name;
- Whether the employment is full-time or part-time;
- Whether the employment is permanent, temporary or casual;
- The date of commencement of the employment;
- The employer’s ABN;
- Details of the employee’s pay;
- Any overtime arrangement in place;
- Any averaging of hours arrangement in place;
- Any leave taken and the balance of the leave entitlement;
- Superannuation contribution details;
- Any individual flexibility arrangement in place;
- Any guarantee of annual earnings in place;
- Details of the termination of the employee’s employment;
- All relevant details in respect of a transfer of business affecting the employee.
Further, section 536 of the FW Act requires that an employer must give a pay slip to each of its employees, in hard copy or electronic form, within one working day of paying an amount to the employee in relation to the performance of work and must include specific information including:
- The period to which the pay slip relates;
- The date on which payment was made;
- The gross amount of the payment;
- The net amount of the payment;
- Any amount paid to the employee that is a bonus, loading, allowance, penalty rate, incentive-based payment or other separately identifiable entitlement;
- Any agreed deductions;
- Details of any superannuation contribution made.
These are both civil remedy provisions, which means that a breach is punishable by a maximum penalty of $27,000 for a body corporate, and $5,400 for an individual involved in the breach.
We are aware that many employers overlook their pay slip obligations in particular, and this is often justified on the basis that “the employees don’t even look at them!”. However, the Grandcity decision should serve as notice to employers that record keeping and pay slips are matters not to be taken lightly. As explained by Judge O’Sullivan of the Federal Circuit Court:
The failure to keep proper records is a significant contravention. The requirement for employers to keep proper records is fundamental to the proper enforcement of rights and obligations under the FW Act. The failure to provide pay slips should also warrant severe sanction as it undermines the proper operation of the FW Act and limits the ability of employees to understand and ensure they are receiving their correct entitlements. Both contraventions warrant a penalty at the mid to upper range.
Accordingly, employers must ensure that they are making and keeping employee records, and that their employees are provided with pay slips in the appropriate form within one day of being paid. The FW Act does not contain any circumstances in which these obligations can be avoided, therefore there are no excuses!
Please contact a member of Lynch Meyer’s Workplace Relations team if you have a query about your employees’ records and pay slips.
