Pay slips and payroll records can feel like paperwork that gets done when there is time. Under Australian workplace law they are a legal duty for every employer. The rules sit in the Fair Work Act and the Fair Work Regulations. Getting them wrong can cost money and make it much harder to defend a wage claim.
This guide covers what a pay slip has to show and how quickly it must be issued. It also explains which records you need to keep and for how long. The aim is to give small business owners a clear checklist they can test their payroll against.
Why pay slips and records matter
Records are the evidence of what you paid and why. If an employee says they were underpaid, your timesheets and pay records are what show the real position. Without them you are relying on memory, which rarely holds up. Good records also make it easier to answer questions from staff before a small issue turns into a formal complaint.
There is a legal consequence as well. If an employer fails to meet its record keeping or pay slip obligations, the employer must disprove a wage claim in court. That reverses the usual starting point. The presumption does not apply where the employer has a reasonable excuse, but that is not something to rely on.
Payroll is one part of the wider body of rules that apply to a business. Our overview of commercial law for business owners explains how contracts, consumer rules and employment duties fit together. Employment law simply carries some of the most detailed paperwork requirements.
When a pay slip must be issued
Employers must give each employee a pay slip within one working day of pay day. This applies even when the employee is on leave. A pay slip can be issued in electronic form or as a hard copy. The Fair Work Ombudsman suggests writing them in plain English so staff can follow them.
Electronic pay slips are common and perfectly acceptable. They should be sent by email or through a personal electronic account, not simply stored in a database. The employee should be able to print the slip easily and view it in private. A shared folder that other staff can open would not meet that standard.
What a pay slip has to show
Every pay slip must include the details below, with deductions and super shown where they apply. These apply to full time, part time and casual staff alike. Most payroll software fills them in automatically, but it is worth checking a sample against the list below.
- the employer’s name and ABN, if there is one
- the employee’s name
- the date of payment and the pay period it covers
- the gross and net amounts paid
- any loadings, allowances, bonuses, incentive payments and penalty rates
- deductions, with the name of the fund or account they were paid into
- superannuation contributions and the name or number of the fund
Some items only need to appear where they are relevant. For staff paid by the hour, the slip should show the hourly rate, the hours worked at that rate and the total paid at that rate. For salaried staff, it should show the rate as at the last day of the pay period and the annual rate. These figures let employees check their pay against their award, agreement or contract.
There is a short exception for new staff. If a pay slip is due within 14 days of the first pay day, the super fund name or number can be left off in one situation. That is where the employee has not chosen a fund and the employer could not get stapled fund details from the ATO.
Family and domestic violence leave
A pay slip must not mention paid family and domestic violence leave. This protects the safety and privacy of the employee. The leave should appear as ordinary hours of work or another payment for work. If the employee asks, it can be shown as another type of leave instead.
Which employee records you need to keep
The list of required records is longer than many owners expect. It starts with general employment details and pay records. It also includes records of hours worked, particularly for casual staff, irregular hours, overtime and any averaging agreements. Leave taken and leave balances must be recorded too.
Several less common arrangements also need a written record. These include annual leave paid in advance, agreements to cash out leave and individual flexibility arrangements. Guarantees of annual earnings, annualised wage arrangements and contractual offsetting arrangements belong on the list as well. Records connected with a transfer of business must be kept if that has happened.
The final group covers the end of employment and super. Employers must keep termination details and records of superannuation contributions. Clear written agreements help here, in the same way they do with clients. Our article on legal agreements used by landscaping businesses shows how written terms reduce arguments later.
How long records must be kept
Employee records must be kept for 7 years. They must be readily accessible to a Fair Work Inspector. They also need to be in a legible form and in English. Cloud payroll systems can meet these tests, as long as you can still reach old data after changing providers.
It is worth checking that last point before you switch software. Export the history and store it somewhere you control. A business that closes or sells still has obligations for the records it created. Planning for this early saves a scramble if an inspector asks for files years later.
Accuracy, changes and access
Records must not be altered except to correct an error. An employer must not keep a record it knows is false or misleading. The law also prohibits making or giving false or misleading pay slips. Knowingly giving false information to officials may be a criminal offence.
Employee records are private and confidential. Even so, employers must give copies to employees and former employees who ask for them. Fair Work Inspectors and some organisation officials can also access records to check compliance. A simple process for handling these requests keeps things calm and quick.
Disputes over unpaid money are stressful for any business, as our piece on clients withholding fees payable explains from the other side. With staff, accurate records are your strongest protection. They show what was agreed, what was worked and what was paid.
Penalties for getting it wrong
Fair Work Inspectors can issue infringement notices for pay slip and record keeping breaches. A notice can be issued within 12 months of the alleged breach. The employer generally has 28 days to pay it. Courts can also order penalties, and knowing or reckless breaches can be treated as serious contraventions with higher penalties.
The Fair Work Ombudsman record keeping and pay slips fact sheet sets out the full requirements. It also lists the legal sections behind each rule. Reading it once a year is a sensible habit for any employer.
Some businesses have an adviser review payroll and employment contracts on a regular basis. Our article on why a commercial lawyer for a dental practice is worth retaining makes a similar point for health businesses. A short review can pick up gaps before an inspector does.
Frequently asked questions
Can I send pay slips by email?
Yes, electronic pay slips are allowed. They should be sent by email or through a personal electronic account. Staff should be able to print them easily and view them privately.
Do casual employees need pay slips?
Yes, the pay slip rules apply to all employees. Casual staff need the same core details as permanent staff. Records of their hours are especially important because those hours often vary.
How long do I keep records after an employee leaves?
Employee records must be kept for 7 years. Former employees can ask for copies during that time. Keep the records legible, in English and easy for an inspector to access.
What if I made a mistake on a pay slip?
Records can be altered to correct an error. Fix the mistake, pay any amount owed and keep a note of what changed. Records must never be changed to hide a problem.
This article is general information only and is not legal advice. Workplace laws change and the rules can differ for employers outside the national workplace system. Speak with a qualified lawyer or contact the Fair Work Ombudsman about your own situation.