If you’re an employer, do you know that the pay slips you issue to staff need to comply with the rules set out under the Fair Work Act?
If you are an employer, it’s probably safe to assume that you know how pay slips work. For example, you already know you have to pay your employees on time and can provide pay slips in electronic or hard copy format. So is that all you need to know? Well, not exactly!
The Fair Work Act has particular requirements in terms of what information should be included on a pay slip. Do you know if your pay slips are compliant?
Delivering pay slips on time
Employers have an obligation to pay their staff on time, but many fail to provide pay slips on time. Pay slips are often seen as a burden for employers and an extra pain to print and distribute to each employee. However, it is a requirement to provide all employees with pay slips within one working day of them receiving pay. Staff must receive the correct information on their pay slip, which needs to be printed or sent electronically in a private and confidential manner.
With the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 coming into effect last year, it is essential that employers maintain accurate employee records, and keep these for a period of seven years. The Fair Work Ombudsman will penalise businesses with fines which, at the end of payday, could have been easily avoided.
What must be included in a pay slip?
Here are the items that must be included on pay slips (followed by some items that don’t have to be included, but should be).
Under the Fair Work Act, pay slips must contain:
- the employee’s name
- business name and ABN
- date of payment
- pay period, e.g. 15-30 March 2018
- pay rate
- gross and net amounts of the payment
- any loadings, overtime, allowances, bonuses, penalty rates or other paid entitlements
- number of hours worked, or salary details
- details of any deductions from the employee’s pay
- details of any superannuation contributions made.
If the employee is paid at an hourly rate of pay, the pay slip must also include:
- rate of pay for the employee’s ordinary hours
- number of hours in that period for which the employee was employed at that rate
- amount of the payment made at that rate.
If the employee is paid at an annual rate of pay, the pay slip must also include the rate as at the latest date to which the payment relates.
Items that don’t have to be included on a pay slip (but probably should be):
- employee’s employment status (full-time, part-time, or casual)
- relevant Modern Award under which the person is employed, if applicable
- employee’s classification under the Award/Agreement
- employee’s bank details.
While it’s okay to show an employee’s annual leave balance on their pay slip, it’s not a requirement. We also don’t recommend including the sick leave balance on a pay slip because it may be an opportunity to abuse the sick leave entitlement. However, you do need to tell employees their leave balances if they ask for it.
When to pay
Most Awards and Enterprise Agreements set out when employees must be paid (e.g. weekly, fortnightly or monthly). If the employee is not covered by an Award or Agreement or the relevant Award or Agreement does not specify a period, then it is up to the employer – so long as the employees is paid at least monthly.
What records must be kept?
The Act requires the following employment records to be kept:
- basic employment details such as the name of the employer and the employee, along with the nature of the employment (e.g. full-time, part-time, or casual/temporary)
- the employee’s start date and finish date
- pay records, including all information required on pay slips
- if the employee is entitled to overtime pay, records of any overtime hours worked and paid
- any arrangements relating to the averaging of hours
- leave entitlements, including details of leave accruals and any leave the employee takes, as well as any agreements to cash out leave
- details of any superannuation contributions, including the contribution date, amount, period, and the fund in which the contribution is deposited
- records relating to the termination of employment, including the party who initiated termination and the manner of termination
- any individual flexibility arrangements entered into
- any guarantees of annual earnings provided.
Additional record-keeping obligations
Employers are required to maintain all employee records in English, in a form that is legible and accessible to employees and inspectors. These records must be accurate and kept for a period of seven years.
Under the Act, employers are required to make a copy of employee records available for inspection and copying by employees, former employees and Fair Work Inspectors.
In certain circumstances, union officials may also have the right to inspect/copy employee records. On receipt of a request to inspect and/or copy records, employers are required to provide onsite access within three days, or alternatively post a copy of the requested records within 14 days. There are restrictions around what records can be accessed and you should seek advice prior to disclosing information.
Kerri-Ann Allen, Senior Employment Relations Adviser, Employsure