Payroll record-keeping requirements
The Fair Work Act requires all Australian employers to keep accurate and complete payroll records. These records serve as evidence of compliance and are essential for resolving disputes.
Employee information
- Full name and address
- Date of birth
- Employment start date
- Employment type (FT/PT/casual)
Pay and hours records
- Hours worked each day
- Pay rates and gross amounts
- Deductions and net pay
- Overtime and penalty hours
Required records under Fair Work
Fair Work regulations specify exactly what records employers must maintain. Missing or incomplete records can shift the burden of proof to the employer in underpayment claims.
Records you must keep
Record retention periods
Different types of records have specific retention requirements:
- Employee records: 7 years after the record is made
- Pay and hours records: 7 years after the pay period
- Leave records: 7 years after the leave is taken
- Termination records: 7 years after employment ends
- Super records: 5 years (ATO requirement, but 7 years recommended)
Record-keeping compliance
The Fair Work Ombudsman can request records during audits. If you can't produce records, or they're incomplete, you may face penalties and an unfavourable assumption in any dispute. The reverse onus provisions mean employers must prove they paid correctly if adequate records don't exist.
Best practices for payroll records
Electronic record-keeping
- Cloud backup: Automatic, secure, accessible
- Search functionality: Quick retrieval for audits
- Audit trail: Track all changes and updates
- Integration: Link time tracking to payroll
Record accuracy tips
- Real-time tracking: Capture hours as worked
- Employee verification: Timesheet sign-off process
- Regular audits: Check records periodically
- Manager approval: Review before payroll
Common record-keeping mistakes
Not recording actual hours worked
Recording rostered hours instead of actual hours masks overtime and compliance issues. Use time and attendance systems to capture real start and finish times.
Destroying records too early
Disposing of records before the 7-year period can result in penalties and create problems if a former employee makes a claim. Maintain proper retention schedules.
Incomplete leave records
Not tracking leave accruals, requests, and balances accurately leads to disputes about entitlements. Use integrated leave management to maintain complete records.
No backup of electronic records
System failures can destroy years of records. Ensure regular backups and consider cloud-based systems for automatic redundancy.
Key takeaways
Payroll records are a legal requirement under Fair Work regulations, with strict rules about what must be kept and for how long (7 years). Accurate, complete records protect employers in audits and disputes, while poor record-keeping can result in significant penalties.
Modern time and attendance systems like RosterElf automatically generate compliant records of hours worked, integrating with payroll software to maintain accurate documentation. This ensures you have the evidence needed for compliance while reducing manual record-keeping effort.
