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 fifth of ACAPMAs Record Keeping Requirements Review series, we will explore the requriements around the keeping of records for paid and unpaid leave that is accrued, taken and cashed out.

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, the requirement to provide and keep appropriate payslips, there is also a requirement for businesses to keep appropriate records around leave.

The requirement can be summarised as;

The employer must keep a record of the leave that has accrued, leave that has been applied for, leave that has been taken (and when), leave that has been cashed out, and the current leave entitlement.   All leave records are employment records that must be retained and able to be provided to employees or inspectors on request.

Family and Domestic Violence Leave – a special case

It is important to note that there are particular requirements for the recording and communicating of certain special leave (like Family and Domestic Violence Leave)

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/

“When it comes to FDV Leave the employer must still keep the records, but they must be kept in a way that does not endanger the employee, and must not be displayed on the payslip”, explains ACAPMAs Elisha Radwanowski.

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

The leave applications, approvals and records of leave deductions, cash outs and other leave records must be kept for at least 7 years after they no longer have effect.

As leave is an entitlement that is payable on termination this means that all records must be kept for at least 7 years after the employment relationship comes to an end.

“As the bulk of payroll and leave is information is now digital, it is recommended to retain all leave records in full and in summary format 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 Leave 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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