Many small business owners aren’t aware that it’s a legal requirement for businesses to not only maintain accurate records on all their employees but to keep them for seven years. This became a requirement in 2017, after the introduction of the Fair Work Amendment (Protecting Vulnerable Workers) Bill into parliament. The aim of this bill is to protect workers—particularly migrant workers and franchise employees—from underpayment and exploitation, and the legislation applies to every Australian business.
As a small business owner, it’s often easy to overlook things that don’t bring in income or have a direct impact on business growth. However, it’s worth being aware that there are harsh penalties that apply to businesses that don’t keep accurate records, with maximum fines of $126,000 for individuals and
$630,000 for corporations for serious breaches of the Act.
What records need to be kept?
The following is a checklist of the records you need to be keeping on each employee:
- Employer name and ABN
- Employee’s name
- Date employee started work
- Employment status – full-time, part-time or casual, and whether the employee is permanent or temporary
- Pay rate
- Gross and net amounts paid to the employee
- Any deductions from the gross amount paid
- Incentives paid such as bonus or penalty rates
Hours of work
- Hours of work if the employee is a casual or irregular part-time employee whose pay is based on time worked
- Penalty rates or loading paid for overtime
- Number of overtime hours and when the employee started and finished these hours
- Any leave (personal, annual etc) taken
- Total leave an employee has
- Where employees are able to cash out annual leave, an employer must record the agreement in which they agreed to the amount being cashed out, as well as the finer details of when the payment was made
Individual Flexibility Agreements (IFA)
- Copy of the written IFA
- Any notice or agreement to terminate the IFA
Who gets to look at the records?
The records remain private, although an employee has the right to look at their own records, even after they’ve ceased working for an employer. Business auditors or Fair Work inspectors may at any stage request to see them also.
It’s worth noting that, should your business be audited by a Fair Work Inspector, the first thing they’re likely to ask for is the record of hours worked, so it’s particularly important to keep accurate records of these. Accurate records of hours worked can also be particularly helpful in the event of other claims, such as Worker’s comp, where those records can prove that a worker was (or wasn’t) on the job when an incident or accident took place.
Fair Work has some excellent basic templates to help you record the information you need. You can access these templates here.
If you’ve got any questions or issues arising from this information, Assurance HR is here to help. Give us a call today on 1800 577 515.