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 full effect in February 2025. In this, the ninth installment of ACAPMAs Record Keeping series, we will explore the requriements around the keeping of records for when an employment relationship comes to an end.

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, and the requirement for businesses to keep appropriate records around leave and superannuation and any annualised salary arrangements, there is also a requirement to keep appropriate records around the end of an employment relationship.

The requirement can be summarised as;

The employer must keep a record of the reason for the termination of the employment relationship, as well as any communication pertaining to the termination and the employment relationship as a whole.   Termination records are employment records that must be retained and able to be provided to employees or inspectors on request.

Termination records include;

  • the type of termination – was the employment relationship ended due to a death, resignation or a dismissal
  • the reason for the termination – what were the specific reasons given by the instigator of the termination (for example what did the employee who was resigning say was their reason for leaving, or what was the reason for dismissal that was communicated to the employee)
  • record of notice provided or paid in lieu of notice
  • communications around the termination – this could be text messages, letters or emails
  • record of final payments and the calculations used to reach those payments

The end of an employment relationship places requriements on the business to review, record and retain details other than just the reason for termination and the discussions or letters exchanged at termination.

The employment relationship coming to an end means that items like;

  • Leave accrued, taken and paid out on termination must be documented and folded into the termination records
  • Outstanding company property items and bonds if applicable
  • Open workers compensation claims

Practically when an employment relationship ends it is important to document the when, the why and the how.  The how being the calculations, payments and background information that was used to process last payments.

It is an opportunity to review the employee file, to ensure it is complete and then to mark it for appropriate storage and disposal, when the disposal time arrives.

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

The Termination records are employment records and all records (including records of the work done that led to payments being made and leave accruing) – the hours/nature of work and the amount the employee was paid for it – needs to be kept for at least 7 years after they no longer have effect.

This means that the records of termination, work and payments will need to be kept for at least 7 years after the termination.

Recap:  Who can access these records?

As outlined in Part 1 of the series the following persons/entities have access to the Annualised Salary 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?

Under the Fair Work Act there are penalties that apply to breaches of employment record keeping requriements.  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.

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