What every Australian business needs to know about employee records

Under section 535 of the Fair Work Act 2009 (Cth), employers must make and keep employee records for seven years. 

Employee records must be:

• in English,
• legible, and
• in a form ‘readily accessible to an inspector’. 

When an employee requests their records, the employer must make a copy available for inspection and copying. 

If the record is kept at the employee’s workplace: 

• a copy must be available at the premises within three business days;
• or posted to the employee within 14 days. 

If records are kept elsewhere, a copy must be made available or posted as soon as practicable.

Failure to comply with employee record-keeping obligations, including producing records when requested, can expose employers to civil penalties. Fair Work Inspectors have the power to issue infringement notices of up to $1980 per breach for individuals and $9990 per breach for a body corporate. The Fair Work Ombudsman may also seek more severe, court-imposed penalties in relation to such breaches. For companies with more than 15 employees, these can be up to $495,000, or up to $4,950,000 for ‘serious contraventions’.

The requirements for record-keeping can be found in regulations 3.32 to 3.41 of the Fair Work Regulations 2009 (Cth).  

Records that employers must make, keep and produce on request under the Regulations include:

• General records: Basic particulars such as the employer’s name, employee’s name, employment type and commencement date.
• Pay records: Records relating to an employee’s pay, including the rate of remuneration, the gross and net amounts paid, and any deductions from the gross amount paid. 
• Entitlements details: Where an employee is entitled to a bonus, loading, penalty rate, allowance or other separately identifiable entitlement, records must set out the details of that entitlement (including sufficient particulars so an employee can understand the basis and calculation). Payment of an ‘all‑inclusive’ or annualised salary does not displace these obligations. 
• Overtime: If a penalty rate or loading must be paid for overtime hours, the employer must keep a record that specifies either the number of overtime hours worked each day or the start and finish times of overtime. This is the case even where an employee is paid an annual salary pursuant to a set off clause in satisfaction of entitlements arising under an applicable modern award.
• Agreements: Copies of specific agreements, such as agreements to average hours, cash out annual leave, or individual flexibility arrangements (IFA). 
• Leave: Records relating to leave, including when leave is taken and how much leave an employee has remaining.
• Superannuation contributions: Records relating to superannuation contributions made behalf of the employee.
• Termination of employment If an employee’s employment is terminated, the employer must record:
  • whether the employment was terminated by consent, notice, summarily or in some other manner (specifying the manner); and
  • the name of the person who acted to terminate the employment. 

In Hisense Australia Pty Ltd v Naskovski ^[1], the Federal Court heard an appeal regarding whether an employment contract is an ‘employee record’ that must be kept and provided on request under the Fair Work Act and the Regulations. 

The primary judge found Hisense contravened the Fair Work Act and the Regulations by not providing Mr Naskovski’s contract upon request. However, on appeal, the Federal Court overturned the primary judge’s finding

The Court held that regulation 3.32 prescribes obligations by reference to specified information that must be recorded, not to particular documents like contracts. While contracts may contain required information, they are not themselves mandated records. 

As a result, a request for an employment contract is not a request for an ‘employee record’ within regulation 3.42. The finding that Hisense had contravened s 535(3) of the Fair Work Act could not stand. 

The Court emphasised that civil penalty obligations must be certain and clearly identified.   Relevantly, there is no explicit obligation in the Regulation to retain a copy of a contract (unlike other specified documents (eg cashing out leave or IFAs)).

The judgment highlights two broader principles: 

• Courts will insist on strict clarity and precision. Employers are unlikely to be penalised for non-compliance with obligations that the legislation does not clearly impose.
• While employment contracts remain critical evidentiary documents, parties seeking access to them might have to rely on other legal avenues rather than the employee-records regime.

In last year’s Woolworths and Coles decision, which we discussed in detail in our previous article,  the Court confirmed that large, sophisticated systems do not excuse basic non‑compliance with the Regulations’ record‑keeping obligations. 

The employers argued that rosters and clock-in data were sufficient and could be reconstructed and interrogated to constitute a compliant record. The Court rejected this argument and emphasised that records must be in a form that is ‘readily accessible to an inspector’ and ‘available for inspection’ by requesting employees. A dataset that, for example, requires reconciliation of a roster against clock-in data, does not satisfy this standard.

These findings reinforce that what must be produced under regulation 3.42 are the prescribed, contemporaneous records themselves, such as time and wages records, overtime particulars, and entitlement details, not underlying datasets from which those details could be reverse‑engineered.

To reduce risk and ensure compliance, employers should:

• Maintain a clear suite of records that directly state the information required by the Regulations, rather than relying on the ability to reconstruct it from rosters or time systems. 

• Ensure records are easily accessible and can be produced quickly to an inspector or employee on request, with processes to meet the timeframes under regulation 3.42.

• Configure payroll and timekeeping systems to record the basis and calculation of loadings, penalties and allowances, not just aggregated amounts.

• Continue keeping overtime and entitlement records even where salaries are structured to absorb them.