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 last instalment of ACAPMAs Record Keeping Requirements Review series, we will explore the requirements around the keeping of records for when a business changes hands.

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, any annualised salary arrangements and the end of the employment relationship, there are also special requriements around the need to access and keep records in the event of a transfer of business.

The requirement can be summarised as;

Where there is a transfer of business, the old employer must give the new employer the records of any employee that transfers with the business.

Transfer of Business Recap

When a business changes hands, if there is a ‘connection’ between the old and new employer this is a transfer of business and there is a record keeping impact for any employees that transfer with the business, or any employees that were employees of the old business that end up working for the new business in the first three months.

Simply, if an employee transfers then there is a requirement for the new business to have all the employment records (engagement documents, actual hours worked, leave taken records, annualised salary and IFA records, superannuation calculation and payment records) and for those records to be made available to the employee, inspectors and other authorised persons on request.

As the old business also has a responsibility to retain these employment records for 7 years after they no longer have effect these employment records must be carefully copied, a copy left with the new business and a copy retained by the old business.

IMPORTANT:  Long Service Leave requriements around transfer of business mean all employment records should be provided to the new businesses for all transferring employees.  The changes to the Long Service Leave laws mean that even when there is a decision by the new business NOT to recognise the time worked with the old business in terms of continuity of employment, the new business MUST recognise the time worked with the old business in terms of Long Service Leave.  This means that a copy of the employment records must be exchanged for all workers who transfer (regardless of entitlement treatment on transfer) and all that are employed within 3 months of the business transfering.

For more on the standard and special considerations when there is a transfer of business see – https://acapmag.com.au/2021/09/acapma-releases-transfer-of-business-guide/

What is an employment record for Transfer of Business?

When an employee is transferring (with or without the entitlements other than Long Service Leave being recognised by the new business) A COPY OF ALL EMPLOYMENT RECORDS MUST BE PROVIDED TO THE NEW BUSINESS.

This includes;

  • Engagement documents and variations,
  • Actual hours worked,
  • PAYG summaries and current year payslips,
  • Superannuation calculation and payment records,
  • Leave accrued, taken and cashed out records (including any termination entitlement payout from the old business),
  • Leave accrued, taken and paid out on termination must be documented and folded into the termination records
  • Training records, and
  • Performance management records.

So does the old business need to keep the records too?

Yes.  Employment records must be kept by the old business for the requisite 7 years after they no longer have effect.  That means 7 years after the sale of the business.

The sale of the business does not mean the employer can destroy or give away the employment records as the business is still responsible for the content and operation of the employment relationship and can still face interrogation from the employee and inspectors for 6 years following the sale.

Recap:  Who can access these records?

As outlined in Part 1 of the series the following persons/entities have access to the transferred Employment 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 ACAPMAs Elisha Radwanowski.

“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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