Sloppy record-keeping compounds the legal exposure in underpayment cases

By Charles Power, partner, Holding Redlich

Employers who fail to comply with statutory requirements to keep time and wages records will be slapped with higher penalties if prosecuted for underpayment. This is just one of many reasons why every employer should conduct regular audits of its human resources arrangements to ensure legal compliance. 

In Fair Work Ombudsman v Pulis Plumbing Pty Ltd & Anor [2017] FCCA 3013 (8 December 2017) an apprentice worked 201 hours of overtime before he was dismissed after three months. The employer underpaid him nearly $27,000 in the three month period.

The employer was unable to produce time and wage records. This meant the Court relied on the employee’s records of the hours worked, even though they were generalised and vague. The Court also imposed a penalty of $20,000 on the employer for breaching pay slip and record-keeping requirements.

The Court noted:

“Given the statutory requirements upon employers with respect to record-keeping, it appears to me that, ordinarily, a Court would accept even the most slight and generalised evidence of an employee as to the hours of employment in circumstances where an employer does not produce appropriate records….in future if the employer fails to keep time sheets and provide payslips the employer has the burden of disproving an employee’s claim about hours worked and payments made.”

As a result of sloppy compliance with requirements for employee records and pay slips, this employer was unable to dispute an employee’s assertions about hours worked. In addition, it was ordered to pay a significant fine.

Employer organisations will be able to minimise their exposure to areas of HR legal risk such as this if they undertake a human resources audit. By conducting a high-level review of your organisation’s exposure to employee claims in key areas of human resource management, including worker engagement, setting and enforcing work rules and standards, and dismissal, you will identify key areas of potential liability and develop risk control measures.

Holding Redlich’s practitioners will provide guidance to clients as to how to carry out this task at a breakfast seminar in its Melbourne office on 20 March 2018. Click here for more details and to RSVP. 

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