There is a requirement for employers to keep and retain accurate and complete records pertaining to the employment of staff.  Failure to keep these records can trigger breach penalties in the millions of dollars under the new criminalised wage theft laws that come into effect in August 2024.  In this, the fourth of ACAPMAs Record Keeping Requirements Review series, we will explore the requriements around generating, providing and retaining payslips.

In addition to the details that need to be communicated, recorded and retained on the commencement of employment, and the requirement to record the actual hours worked by the employee, there is a requirement for businesses to provide and keep appropriate payslips for each employee.

The requirement can be summarised as;

A compliant payslip must be provided to the employee with one day of pay day.  All payslips are employment records that must be retained and able to be provided to employees or inspectors on request.

What is meant by ‘compliant payslip’ must be clearly understood by all businesses.

Payslip must haves

A compliant payslip must have;

  • The employees name
  • The employers ABN
  • The employers name
  • The date that the payment was made
  • The pay period that the payslip pertains to (eg.  Week Ending 14/6/2024, or 8/6/2024-14/6/2024)
  • The gross amount of the payslip
  • The net amount of the payslip
  • Any loadings, allowances, boneses, penalty rates or entitlements
  • The hourly rate of pay (for employees paid by the hour)
  • The annual salary (for employees paid a salary)
  • Any deductions made from the pay with descriptions and amounts (such as union fees, tax, HECS)
  • Superannuation details including the amount and the name of the fund (ideally but optionally the member number also)

The format of the payslip is a matter of choice for the employer, provided it meets these minimum inclusions.

What not to put on a payslip

There are also things that should NOT be included on a payslip.

A payslip must NEVER include any reference to Family and Domestic Violence Leave.  This is a safety requirement as well as a compliance requirement.

When an employee takes Family and Domestic Violence Leave it should be recorded as ordinary time and every effort should be made to reduce the digital footprint of any leave request or approval.  For more on Family and Domestic Violence Leave see; https://acapmag.com.au/2023/08/family-and-domestic-violence-leave-applies-to-small-businesses-now/

Payslip vs Payroll Report

Businesses should ensure they understand the difference between the payslip, which is the version that the employee receives, and the payroll report, or payroll activity report that their accounting system generates.

“The payslip is the document that the employee receives.  It is important that businesses are either keeping a copy of the actual format that the employee received each pay period, or, a sample of the format provided each period and a copy of the back end payroll report that was used to generate all employee payslips.  The payroll report on its own will not comply with the record keeping requriements”, explains ACAPMAs Elisha Radwanowski.

While the information on a payslip is typically taken from the payroll report, there are elements that are required to be on the payslip that are ‘formatting’ or ‘display’ elements, like the ABN that the business will need to be able to prove to an inspector were actually provided to the employee at the time.

“The record keeping requirement being 7 years AFTER the record has no further effect, combined with the rapid advances in payroll and timekeeping technology mean that businesses need to ensure that they are backing up not just the payroll reports and data, but also a real ‘point in time’ copy of at least one of the payslips as they were issued at the time”, continues Elisha.

So how long does the business need to keep Payslip Records?

The answer is not simple, and each case will need to be reviewed prior to the destruction or disposal of records, but a summary is;

  • Actual Payslips, or a sample payslip from the pay period and a Payroll Activity Report, must be kept for at least 7 years from the date of financial year that the payslip was issued in
  • In summary format, showing annual/quarterly Payroll Activity for each of the wage and entitlement categories must be kept for at least 7 years AFTER termination of employment.

“As the bulk of payroll information and payslips themselves are now digital, it is recommended to retain all payslip data and samples for at least 7 years after termination of employment as a best practice approach”, notes Elisha.

Recap:  Who can access these records?

As outlined in Part 1 of the series the following persons/entities have access to the Payslip Records;

  • The employee that the records reflect – eg. Jeremy can access Jeremy’s records on request and the Business is required to provide the records on request
  • The business payroll and accounting personnel and other authorised entities including internal and external auditors
  • Fair Work Inspectors, who can request these records in person or electronically
  • Union officials that hold appropriate permits may request these records with the permission of the employee involved or with an Order from the Fair Work Commission

Recap:  What if there are gaps in records?

While every business strives for compliance at all times, the reality is that it is not uncommon, particularly in small businesses, for there to be oversights and gaps in compliance.

Oversights, errors and genuine mistakes are understood and are not the target of regulators when it comes to a penalty based approach.  Regulators are much more interested in ensuring that the business corrects the issues and implements compliant systems to address any of these genuine unintended issues when they come to light.

“This assistance based approach is only available to businesses that are taking an active effort to understand and comply with their responsibilities.  Ignorance of the requirements is no excuse or defence, so all businesses need to work on understanding the requirements and updating their systems where gaps are identified”, explains Elisha.

“What a business must NEVER do is create documents or falsify documents, if there are gaps then there are gaps.  That will have to be accepted and systems updated.  But there is no option to ‘go back’ and ‘create’ the missing records.  If there is a need for modelling to be used to calculate entitlements or address a dispute then there are processes for that, and ACAPMA assists Members with those processes.  But it is never ever ok to create records, accept the gaps, seek assistance and correct the systems”, cautions Elisha.

Recap:  What are the penalties for breaches?

There are penalties that apply to breaches of record keeping requriements, including to the requirement to provide and retain Payslips.  These penalties range from $66,000 to $7,825,000 to the business under the current and coming penalty schemes respectively.

More from this series

ACAPMA Employment Compliance Health Check for Fuel Retail and Transport

The Fair Work Ombudsman has made it clear that all employers, of all sizes, should be utilising structured audit programs to address and avoid underpayments.  ACAPMA strongly encourages all members to take this call to heart and ensure that they are having a professional, independent and industry specific audit of compliance done regularly.

“ACAPMA offers members the ability to access fuel transport and fuel retail specific Assisted Compliance Audits, where ACAPMAs in house employment professionals review systems and outputs.  The ACAPMA Assisted Compliance Audits provide members with more than just a list of non-compliances, these audits provide members with ‘assistance’ in the form of templates, resources and guidance, to address the non-compliances and to ‘fix’ the systems to avoid future non-compliances”, explains Elisha.

For more on the ACAPMA Assisted Compliance Audits see;

Here to help

ACAPMA members are reminded that they can access the advice support resources and representation of the ACAPMA Employment Professionals on this issue, or indeed any other employment issue, via employment@acapma.com.au.

HR Highlights are things to consider, implement and watch out for in your business. They are provided as general advice and you should seek further advice on your situation by contacting the ACAPMA Employment Professionals via employment@acapma.co.au  its free for members. Click here to apply for ACAPMA Membership.

Elisha Radwanowski BCom(HRM&IR)
ACAPMA

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