Small and family business employers may not be aware of stringent record-keeping obligations under the Fair Work Act 2009 (“The Act”) and the potentially serious ramifications for non-compliance.
The Act imposes obligations on employers to make and keep “employee records” for 7 years and to provide employees with pay slips. These records must include:
1. information about the rate of pay,
2. the hours actually worked by the employee,
3. details of any loadings or allowances or penalty rates,
4. overtime hours worked (including start and finish times),
5. leave accruals, and
6. superannuation.
This is not an exhaustive list but indicates the type of records and information that needs to be kept.
All employees have a right to request copies of these employee records, and an employer who receives a request has an obligation to provide the records. Failing to provide the records in a timely manner (or at all) is a contravention of the Act and can attract a financial penalty.
It is important to note that if an employee commences an underpayment claim and the employer has not kept the necessary records, then the employee’s assertions about the days and times they worked are presumed to be correct unless the employer can prove otherwise.
Section 557C of the Act places a difficult onus on the employer to overcome in this situation. Ordinarily an applicant or plaintiff would need to prove the key assertions in their case. This section reverses that onus onto employers, and in doing so highlights the importance of record-keeping.
Several recent matters have highlighted the complexity for employers overcoming this onus. In Ghimire v Karriview Management Pty Ltd (No 2) [2019] FCA 1627, an employee claimed they had not been paid for some hours of work. The Federal Court had concerns about the employee’s credibility but was required to accept the employee’s assertion about the hours worked because the employer did not keep proper employee records so could not overcome the onus.
Similarly in Grewal v Alphabond Pty Ltd and Frank Taddeo [2020] SAET 21, the Tribunal had reservations about the employee’s assertions about the hours worked, but again the employer had failed to comply with their record-keeping obligation and could not overcome the onus.
In both instances, the employee received compensation on the basis of the hours they said they worked (even though there were reservations about whether those hours were in fact worked).
Record-keeping can be one of those areas that is overlooked by small and family business employers. An informal or casual approach to employee record-keeping can create difficulties in the event of an underpayment claim in the future, and businesses should review their approach.
An employer who does not keep full and proper employment records can expect a difficult task disproving an employee’s assertion about hours of work and defending an underpayment claim.
If you think your business needs some advice with managing employee records, employment contracts, policies and compliance obligations, please contact Peter Healey from Cowell Clarke’s Employment and Workplace Relations team on (08) 8228 1111 or email (phealey@cowellclarke.com.au).
