Employer Record Keeping: What You Must Keep for 7 Years

Under section 535 of the Fair Work Act 2009 and the Fair Work Regulations 2009, employers must make and keep employee records covering a comprehensive list of categories. These include: the employee's full name, date of birth, and start date; whether the employee is full-time, part-time, or casual; the applicable modern award or enterprise agreement; the employee's classification level under that instrument; the employee's ordinary hours of work; gross and net pay amounts for each pay period, including any deductions and the reasons for those deductions; leave balances and all leave taken (type, dates, and amounts paid); superannuation fund details and contribution amounts; hours worked each day (including start and finish times, and unpaid break times); overtime hours worked; any individual flexibility arrangements or guarantee of annual earnings; and details of any termination, including the reason and notice given. For piece workers, you must also record the number of pieces completed.

Each record category has specific regulatory requirements — it's not enough to simply keep payslips. The records must be accurate, complete, and verifiable against your payroll system.

All employment records must be retained for 7 years after the record is made, or 7 years after the relevant action (such as the end of employment). So if an employee works for you for 5 years and then leaves, you must keep their records for 7 years after their departure — a total of 12 years from when some records were first created. The 7-year rule applies regardless of how the employment ended: resignation, termination, redundancy, or end of a fixed-term contract.

It also applies to casual employees, including those who worked only a single shift. Many employers underestimate the practical implications of this rule.

If you had 20 casual staff working events over a summer season in 2020, you must retain their records until at least 2027. Cloud-based payroll systems (Xero, MYOB, QuickBooks, KeyPay) handle retention automatically as long as you maintain your subscription. If you switch payroll providers, export and archive all historical data before cancelling the old system. Lost records can't be reconstructed and will be presumed to support the employee's version of events in any dispute (check your payslip).

Employment records must be in a legible form, in English, and readily accessible for inspection. The Fair Work Act doesn't mandate a specific format — paper records, digital records, or a combination are all acceptable. However, the records must be easily producible if requested by a Fair Work Inspector, which in practice means digital records stored in a well-organised system are strongly preferred.

If you keep paper records, they should be stored securely, protected from damage, and organised so that any employee's records can be located quickly. Scanned copies of paper documents are acceptable provided they are legible and the originals were accurate.

Quick version: For digital records, ensure regular backups and that the system maintains an audit trail — records shouldn't be able to be altered without the change being logged. Pay slips must be issued to employees within 1 business day of payment and must contain prescribed information including the employer's ABN, pay period, gross and net amounts, and super contributions. Electronic payslips (email or payroll portal access) satisfy this requirement as long as the employee can access and print them.

The penalties for failing to keep proper employment records are severe and have been significantly strengthened in recent years. Under the Fair Work Act, failure to make or keep required records carries a maximum civil penalty of $21,840 per contravention for an individual, and $109,200 for a small business body corporate, or $546,000 for a body corporate with 15 or more employees. Each missing or deficient record category for each employee can constitute a separate contravention — meaning a single payroll audit failure across 10 employees could theoretically result in hundreds of thousands of dollars in penalties.

More practically devastating is the reverse burden of proof introduced in 2022. Under section 557C of the Fair Work Act, if an employer fails to produce required records or produces records that are incomplete, the burden shifts to the employer to disprove the employee's claims about their hours, pay, and entitlements.

Put simply, in an underpayment dispute, if you cannot produce compliant records, the employee's version of what they worked and what they were owed is presumed to be correct. This provision has fundamentally changed the litigation landscape for wage theft cases (and yes, this applies to casuals too).

About the most commonly deficient records are time and wages records — the daily record of when employees started work, when they finished, and when they took unpaid breaks. For award-covered employees, this data is critical because it determines whether correct penalty rates, overtime, and minimum engagement periods have been applied. A compliant time record for each employee should include: the date, start time, finish time, total unpaid break time, total hours worked, the applicable pay rate(s), and any allowances triggered.

For employees working across different rates in a single shift (e.g., ordinary hours then overtime), the record should break down hours by rate category. Digital time-tracking tools (Deputy, Tanda, KeyPay, Humanforce) automate this process and integrate with payroll, reducing both the administrative burden and the risk of error.

Quick version: If you use manual timesheets, have employees sign them each pay period and keep both the original and a copy. Reconcile timesheets against payroll each period to catch discrepancies early. Use our Cost of Employment Calculator to verify that your all-in hourly cost accounts for every obligation including super, workers comp, and leave accrual.