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The importance of record keeping

Posted on : Wednesday, 23 May 2018

A recent decision of the Federal Circuit Court of Australia demonstrates the importance and subsequent costs to all parties where employee records are not kept and/or maintained, and where respective legal obligations and compliances are not met.


In this case involving two proceedings, both the employer and the sole director (accessorial liability) were ordered to pay combined penalties of $258,495 and $51,735 for breaches and admitted contraventions of the Fair Work Act and the Fair Work Regulations involving different employees (in the two proceedings).


The case

The two proceedings involved the following matters:


  • The failure of the respondents to comply with compliance notices issued by the Fair Work Ombudsman (FWO) under s.716 of the Fair Work Act in relation to underpayments to seven employees, and the failure to provide pay slips, make and keep employment records and give the relevant employees Fair Work Information Statements; and
  • Involved underpayments under the award to five employees, the failure by the respondents to comply with a notice to produce records or documents and to provide pay slips, and the making and use of employment records that were false or misleading.


Summary decision

The following are some summarised references from the Court's decision:


  • A number of first proceeding employees were vulnerable employees because of their age, or that they were foreign nationals working pursuant to visas - all were 25 years or younger;
  • The failure to make and keep records is a serious matter;
  • The evidence before the court - the underpayments had a significant impact on the first proceeding employees, and contributed to difficulties in affording rent, food and paying bills;
  • At penalty hearing, the respondents had not expressed any contrition, nor taken any corrective action;
  • Other than making full admissions in the statement of agreed facts, the respondents had shown no genuine contrition or remorse, nor had they taken any corrective action;
  • One of the purposes the purpose of record-keeping and payslip is to secure the enforcement of minimum standards by enabling effective investigation and enforcement of the employee entitlements by the regulator. Another of the purposes is to enable employees to independently verify their entitlements, and thereby provide employees with an ability to enforce compliance. The failure to provide employees with pay slips in accordance with the act and the regulations disempowers employees from enforcing their entitlements;
  • The failure to provide pay slips effectively creates "a structure within which breaches of industrial laws can easily be perpetrated"; and
  • The court was satisfied, in the second proceedings, that the respondents deliberately engaged in the contraventions. This conduct enabled the respondents to gain a commercial advantage at the expense of the second proceeding employees.


A summary of this decision can be found on the Workplace Relations document library.