Record Keeping Requirements for Employers: What You Need to Know

how long do employers need to keep employee records

By Gemma Little, Associate

Keeping employment records is your responsibility as an employer

Everyone knows that employers must keep employee records, right? Apparently not. Some employers have been caught out because they have either not kept adequate employee records, or not kept employee records at all.

Failure to keep records is a breach of the Fair Work Act 2009 (FW Act) for which the employer may be fined. However, after the enactment of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Vulnerable Workers Legislation), the consequences of failing to keep employee records are much more significant, including a tenfold increase in fines and a handicap in defending employee claims.

Record keeping requirements for employers—what you need to know


What are the record keeping requirements for employers? How long should employers keep employee records and how long do employers need to keep payroll records? The FW Act requires employers to make and keep employee records with a vast array of information, and to keep these records for a minimum of seven years. These records need to be comprehensive and some of the information which needs to be retained includes:

  • the nature of the employment (casual, permanent, temporary, full-time, part-time etc.)
  • date the employment began
  • ordinary and overtime hours worked
  • the rate of pay
    • gross and net amounts paid
    • any deductions from the employee’s wage
    • incentive payments, loadings, penalty rates, or allowances paid
    • information on superannuation contributions made on behalf of the employee
  • leave balances (including when the employee takes leave)
  • information around the employee’s termination

In addition to these employer records, employers must provide their employees with a pay slip within one day of paying wages. Pay slips need to include the following information:

  • employer’s name and ABN
  • employee’s name
  • period to which the pay slip relates
  • date payment was made
  • gross and net payment amounts (also outlining any amount paid that is separately identifiable from the employee’s ordinary earnings e.g. bonus or penalty payments)
  • details of any deductions
  • superannuation contributions

Historically, an employer breaching the FW Act by failing to keep records or provide the requisite pay slips could be fined up to $63,000 for each breach. In addition, if an individual was involved in the breach, they could be personally fined up to $12,600 per breach.

Vulnerable Workers Legislation means stricter requirements for employers

In September 2017, the Vulnerable Workers Legislation took effect.

This made several changes to the FW Act aimed at protecting vulnerable workers. These changes included strengthening the Fair Work Ombudsman’s (FWO) power to collect evidence in investigations and making franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries in specified circumstances.

The changes also included three key amendments to recording-keeping related provisions of the FW Act.

1. False or misleading records

The Vulnerable Workers Legislation introduced new provisions prohibiting employers from making, keeping or providing to the FWO records that they know are false or misleading in a material way. These provisions include a prohibition against employers providing pay slips that contain materially false or misleading information.

These provisions are aimed at employers such as those in the recent case of FWO v Xia Jing Qi Pty Ltd & Anor [2019] FCCA 83. In this case, the employer, a former 7-Eleven franchisee, knowingly presented false and misleading payroll records to the Fair Work Ombudsman when requested. The employer had implemented a cashback scheme whereby employees had to return to their employer the portion of their wages that was in excess of $15 per hour. The employees were paid by electronic bank transfer and then had to cash out the ‘excess’ amount and place it in a safe drop box located in the 7-Eleven store. The employer did not alter the pay records to reflect the employees’ lesser wages.

2. Maximum penalties

The Vulnerable Workers Legislation increased the maximum penalties tenfold (to $630,000 for employers and $126,000 for individuals per breach) for ‘serious contraventions’ of the requirements to keep records and to issue payslips.

A breach of the FW Act is a ‘serious contravention’ if it was:

  1. committed knowingly; or
  2. part of a systematic pattern of conduct relating to one or more employees.

The meaning of ‘serious contravention’ has not yet been tested in the courts, but the Legislation notes that several factors may be relevant to whether a serious contravention has occurred including the number of contraventions, the period over which the contraventions occurred, the number of persons affected by the contraventions, the person’s response (or failure to respond) to any complaints about the contraventions, whether the person failed to make or keep records in relation to the contraventions and whether the person failed to give a pay slip relating to the conduct constituting the contravention.

3. Reverse onus of proof

In most cases, if an employee makes a claim against an employer, the employee has the onus of proving their claim. However, following the amendments made by Vulnerable Workers Legislation, if an employee brings a claim and the employer failed to make and keep records as required in relation to matters raised in the claim, then the employee’s assertions in relation to those matters are assumed to be proven and the employer has the onus of disproving the assertions.

As an example, if an employee alleges that they were underpaid, but the employer has not kept records detailing what the employee was paid or the hours the employee worked, the court assumes that the employee has been underpaid unless the employer can prove otherwise. There is an exception to this reverse onus of proof if the employer provides a reasonable explanation as to why records were not kept.

In January 2019, the FWO launched the first legal action using these new reverse onus of proof provisions. This action is against two sushi fast food outlets that allegedly underpaid 9 migrant workers by almost $20,000. In response to the FWO issuing a notice to produce records relating to the employee, the company advised that it did not have employment records and pay slips but produced ‘reconstructed’ records. The case is listed to be heard in August 2019 – sign up here to receive MDC Legal’s newsletter for updates.

What does this mean for employers?

Ensuring that proper employee records are being made and kept is a fundamental 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 establish and maintain 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.

MDC Legal is a leader in providing advice and ensuring your business is compliant with Fair Work legislation. MDC Legal can advise your business on the best way to ensure compliance with the FW Act. Contact MDC Legal today on (08) 9288 4000.