Reversal of onus and record keeping

The Fair Work Act and Regulations require employers to keep employee records for seven years. In summary, employers must keep the following employment records:

  • Basic employment details (employee name and nature of their employment);
  • Pay, overtime hours and averaging arrangements;
  • Leave entitlements and superannuation contributions;
  • Termination of employment (where applicable);
  • Individual flexibility arrangements and guarantees of annual earnings.

Recent amendments to the Fair Work Act have introduced changes to make employers more accountable for their failure to keep employee records. 

According to the Fair Work Ombudsman, the majority of their prosecutions involved record-keeping contraventions. In a significant number of those cases, the Fair Work Ombudsman’s ability to calculate the correct payments due was compromised because of insufficient records being kept by the employer. 

The new section 557C(1) of the Fair Work Act recognises the importance of record keeping by employers. 

The effect of the new section 557C is that if an employer is being prosecuted by the Fair Work Ombudsman for alleged underpayment and is unable to produce employee records (which they are required to have kept), then the evidentiary burden in relation to a particular allegation in that matter, is reversed. This means the employer is required to disprove the allegation. 

The new section 557C removes any incentive for employers to ignore record-keeping obligations as a means of avoiding detection of employee underpayments. 

Employers should also note that the maximum penalty for contraventions of these provisions have increased to $63,000 for a company and $12,600 for an individual. 

Disclaimer: the short summary above is not legal advice and for more information on employer record keeping obligations call NECA Legal (WA) Pty Ltd on (08) 6241 6129 or email necalegalwa@ecawa.org.au