The FW Act mandates employers to make and keep employee records with a vast array of information, and to keep these records for a minimum of seven years. However, the definition of ’employee record’ under the Privacy Act 1988 (as referred to by the Fair Work Act 2009), is for personal information held by an employer in relation to an employee’s employment.

In respect of prospective employees at any stage of recruitment and have not yet been engaged for employment, they are excluded from an employer’s obligations to maintain employee records under the Fair Work Act. Instead, personal information held by employers in relation to prospective employees is expected to comply with the Australian Privacy Principles (APP’s).

Note that the APP’s do not mandate a fixed timeframe for how long personal information about a person is held, as long as that information was collected with consent and is used for the primary purpose it was intended for. Howbeit, it is imperative for employers to have policies on how long information collected during the recruitment stage is held. Experts recommend a period of 1 year for those prospective employees that make it to the interview stage.

In Australia, employment records can be written or electronic as long as they are in a form that can be printed. The records are expected to be in English. Time and wage books can be used to keep employment records, however, it is the employer’s responsibility to ensure the time and wage book includes all of the required information.

Note that employers are expected to keep all employment records for at least seven years after they are made for both current and past employees. Records relating to long service leave are also expected to be kept during the period of employment and for seven years from the date employment ends.

In Australia, it is the employer who is legally required to keep the correct employment records. If the employer uses a third party (such as a book keeper) to manage payroll, the legal responsibility is still on the employer to make sure that the required information is collected and maintained.

Have it in mind that employers can be fined up to $5,000 by the Industrial Magistrates Court for not keeping employment records or for keeping inadequate or fraudulent records. A common requirement that employers have failed to observe is a lack of detail in keeping employment records, particularly for employees covered by a WA award. Note that employers can also be fined for not providing employment records to inspectors. These inspectors have statutory powers to investigate complaints from employees where appropriate and employers are obliged to provide records when required to do so.

What Records Have to Be Kept and What Needs to Be in Them?

Always note that in Australia some certain information needs to be kept for each employee. If an employee is paid an annual wage under an award, employers are mandated to keep extra records for these employees. Here is a list of the records that an employer has to keep and what information has to be in the record.

  1. General

  • Employer’s and employee’s name
  • Employer’s ABN (if any)
  • Employee’s commencement date
  • Whether the employee is full – time, part time, or casual
  • Whether the employee is permanent or temporary.
  1. Pay

  • Pay rate paid to the employee
  • Gross and net amounts paid
  • Any deductions from the gross amount
  • Details of any incentive – based payment, bonus, loading, penalty rate, or other monetary allowance or separately identifiable entitlement paid.
  1. Hours of work

  • Any penalty rates or loadings paid to employees for overtime hours worked, including: the number of overtime hours worked by an employee during the day and When the employee started and finished the overtime hours
  • The hours an employee works if the employee is a casual or irregular part – time employee who is paid based on time worked
  • A copy of the written agreement if an employer and employee have agreed to an averaging of the employee’s work hours.
  1. Leave

  • Any leave taken
  • How much leave an employee has.

If an employee is able to cash out annual leave, the employer has to keep:

  • A copy of the agreement to cash out the amount of leave
  • A record of how much was paid, the amount of leave cashed out and when the payment was made.

Note that under an award, if an employer agrees for an employee to take annual leave in advance, the employer has to keep a copy of the agreement. The agreement has to say the amount of leave taken and the day the leave starts.

  1. Superannuation contributions

  • Amount paid
  • Pay period
  • Date(s) paid
  • Name of super fund
  • Reason the employer paid into the fund (e.g. a record of the employee’s super fund choice and the date they made that choice).

Also note that if an employer pays a defined benefit interest into a defined benefit fund , employers don’t have to include these contributions in the record.

  1. Individual flexibility agreements

If an employer and employee agree to an individual flexibility agreement under an award or registered agreement, a record must include both:

  • A copy of the written agreement
  • A copy of any notice or agreement to terminate the flexibility agreement.
  1. Guarantee of annual earnings

  • The guarantee
  • The date the guarantee was cancelled (where applicable).
  1. Ending employment

  • How the employment was terminated e.g.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.

Conclusion

Making sure that proper employee records are being made and kept is a very important and constant requirement of running a business and given the heavy penalties for employers who fail to keep adequate records, it makes commercial sense to create and sustain adequate employee records for the legislated seven – year period.

Failure to do so could have dire consequences, including tying your hands in defending employee claims, and exposing the business and key individuals to significant penalties.

Ajaero Tony Martins