What financial records have to be kept and what needs to be in them?
Certain information needs to be kept for each worker and business transactions.
Here is an overview of the records that are needed. This can look a little daunting but within a short time it will seem clearer. You can start out with a very simple and basic set up then aim to build to what is considered best practice.
Below are components which are usually included in your larger documents, letters and agreements. The main forms being a service and costings contract and invoices for services or an employment agreement, worker details record, and timesheets. If your direct employing you will send notification to the tax department of how many workers you have and complete PAYG summary statements. More on this below So the information here is more like an insight and check to ensure you have the relevant important points covered in your paper trail as it applies to your workers, and is in keeping with the required laws of the Fair Trading Commission and a governing Award. For the purpose of this site all the legal compliance for wages and pay, relate to the SCHCADS Award of 2010.
General information to keep-
- employer’s and workers names
- An Australian Business Number (ABN) (if any) or tax number
- worker commencement date
- the worker employment definition i.e.- full-time, part time, or casual.
Pay rates–
- Pay rate paid to the worker
- gross and net amounts paid
- any deductions from the gross amount
- details of any incentive-based payment, bonus, loading, penalty rate, or other monetary allowance or separately identifiable entitlement paid.
Hours of work
- any penalty rates or loadings paid to full-time or regular part-time workers for overtime hours worked
- the hours a worker works if the worker is:
- a casual or irregular part-time worker who is paid based on time worked
- a pieceworker
- a copy of the written agreement if an employer and worker have agreed to an averaging of the workers work hours.
Leave
- any leave taken
- how much leave a worker has.
- If an worker is able to cash out annual leave, the employer has to keep:
- a copy of the agreement to cash out the amount of leave
- a record of how much was paid, the amount of leave cashed out and when the payment was made.
- Under an award, if an employer agrees for a worker to take annual leave in advance, the employer has to keep a copy of the agreement. The agreement has to say the amount of leave taken and the day the leave starts.
Superannuation contributions
- amount paid
- pay period
- date(s) paid
- name of super fund
- reason the employer paid into the fund (eg a record of the workers super fund choice and the date they made that choice).
- If employers pay a defined benefit interest into a defined benefit fund, employers don’t have to include these contributions in the record.
Individual flexibility agreements
- If an employer and worker agree to an individual flexibility agreement under an award or registered agreement, a record must include both:
- a copy of the written agreement
- a copy of any notice or agreement to terminate the flexibility agreement.
Guarantee of annual earnings
- the guarantee
- the date the guarantee was cancelled (where applicable).
Ending employment
- how the employment was terminated e.g.by agreement, summarily, or in some other way (specifying details)
- if notice was provided and, if so, how much
- the name of the person who terminated the employment.
- any outstanding pay needs to be paid within 7 working days of termination.
Transfer of business (this is included for the purposes of service providers accessing information form this site.)
Where there has been a transfer of business, the old employer has to give the new employer records of any transferring worker. The new employer also has to ask for employment records from the old employer for any transferring worker who becomes a worker within three months of the sale.
Who can access records?
Workers records are private and confidential. Only the employer, payroll staff, the worker and authorized individuals, such as an accountant, can access records.
If a worker asks to see their records, an employer must make them available.
Fair Work Inspectors can also ask for time and wage records to find out what a worker is entitled to and whether they have been paid correctly.
What happens if records aren’t kept?
If records aren’t kept or are incorrect, Fair Work Inspectors can give employers a fine, called an infringement notice. If an employer’s failure to meet the requirements is serious, wilful or repetitive the employer can be taken to court.
PAYG payment summaries -for individuals
If you employ workers you’re responsible for witholding their tax contribution and giving them an annual PAYG payment summary and sending a copy of the summary to the tax department at intervals. You can choose monthly or quarterly.
- When workers have received wages or payments during the year, they should receive a pay as you go (PAYG) payment summary from you the employer. The payment summary will show the total payments they received and total amounts withheld for the financial year. Payments include income earned from you through part-time or casual work.
- Workers should still receive a payment summary even where no tax was withheld.
- Examples of payments workers could received include:
- salary
- wages
- commissions
The PAYG payment summary will include all of the following:
- Workers gross income from the employer
- total tax withheld
- The employers’ Australian business number (ABN) or withholding payer number (WPN).
- Workers need this information from employers as a PAYG payment summary to complete their tax return.