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The Perfect Payslip

The Perfect Payslip (Last Updated On: February 15, 2019)

If you are an employer, you’re probably across how pay slips work, right?

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 that’s it right? That’s all you need to know – well, not exactly!

Did you know that 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? Not sure?

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 your employees with pay slips within one working day of them receiving pay. Your staff must receive 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) Act 2017 now in effect, it is also essential that employers maintain accurate employee records, and keep these for a period of seven years. The Fair Work Ombudsman can 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 you must include 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
  • gross and net amounts of the payment
  • any loadings, overtime, allowances, bonus/commission payments, penalty rates or other separately identifiable amounts paid
  • number of hours worked, details of any deductions from the employee’s pay
  • details of any superannuation contributions made
  • pay rate (their hourly rate or their salary as at the last day in the pay period)

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 you don’t have to include on a pay slip (but you should do it anyway).

  • employee’s employment status (full-time, part-time, or casual)
  • relevant Modern Award under which you are employing the employee, if applicable
  • employee’s classification under the Award/Agreement
  • employee’s bank details
  • employee’s leave accrual balance

While it’s okay to show an employee’s annual leave balance on their pay slip, it’s not a requirement.  It is also not a requirement to put sick leave balance on a payslip, and doing so can tempt employees to use all their sick leave entitlement illegitimately. 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 (eg. 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 you so long as the employees is paid at least monthly.

Further 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 where they suspect a contravention of the Fair Work Act or other employment legislation has occurred. There are restrictions around what records can be accessed and you should seek advice prior to disclosing information.

The Fair Work Regulations also require the following employment records to be kept:

  • basic employment details such as the name of the employer and the employee, the employer’s ABN, along with the nature of the employment (eg full-time, part-time, or casual/temporary)
  • the employee’s start date and finish date
  • individual flexible arrangements
  • agreements related to averaging of hours

Key takeaways

So now that you know what to include on your pay slips, it’s important that you check your current systems and ensure that pay slips being produced are compliant.

Don’t assume that just because you are using software that everything will be okay – software is only as good as the person using it. As an employer it’s up to you to get pay slips and record-keeping right.

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