By Emma-Lee Oliver | Senior Payroll Consultant, APA
There was a time when I thought of timesheets as simply the starting point for payroll.
Employees completed them, managers approved them, payroll processed them and everyone moved on.
After spending the last few years working on payroll compliance reviews and underpayment remediations, I have come to see them very differently.
Some of the biggest challenges I've faced haven't been interpreting awards or calculating underpayments. They've been trying to work out what actually happened because the records simply weren't there.
I've worked on projects where organisations had no timesheets at all. Instead, they were left trying to reconstruct historical work patterns using whatever information they could find. Employee interviews, manager recollections, rosters, calendars, emails, access records and other documents all became pieces of the puzzle, with the hope of building an accurate picture of hours worked years earlier.
Sometimes that evidence was enough to build a reasonable picture. Other times, it wasn't. Where start and finish times or meal breaks couldn't be established, assumptions had to be made. Those assumptions were often reasonable based on the information available, but they remained assumptions and that meant there was always the possibility they didn't reflect what actually occurred.
When the evidence doesn't exist
One of the realities of remediation projects is needing to recalculate historical pay against the applicable modern award.
That sounds straightforward until you realise the award may require overtime to be assessed based on actual start and finish times, or meal breaks taken during the shift.
Without those records, you can't accurately determine whether overtime, penalty rates or minimum break provisions have been applied correctly.
Instead, assumptions have to be made.
Perhaps employees are assumed to have worked their rostered hours. Perhaps they're assumed to have taken their unpaid meal break every day. Those assumptions may be reasonable, but they may also be wrong.
An employee who consistently started work early, skipped meal breaks during busy periods or regularly stayed back after their roster finished could have very different entitlements from someone who worked exactly to the roster every day.
Without accurate records, nobody can say with certainty.
Modern Awards require more than total hours
Another common misconception is that recording total daily hours is enough.
Many modern awards require employers to keep far more detailed records, including actual start and finish times, paid and unpaid meal breaks and overtime worked. Some awards also require employees to acknowledge or sign these records.
These aren't simply administrative preferences. They're record-keeping obligations that provide the evidence needed to demonstrate compliance.
Fair Work requirements
The Fair Work Act and the Fair Work Regulations also require employers to maintain accurate employment records, including records of overtime where applicable.
These records are not just for payroll processing. They are there to demonstrate that employees have been paid correctly and that workplace obligations have been met.
The reverse onus of proof
The importance of maintaining compliant records has increased significantly with section 557C of the Fair Work Act 2009.
Often referred to as the reverse onus of proof, this provision means that where an employer has failed to keep or produce the required employment records, a court may presume an employee's allegations about hours worked are correct unless the employer can prove otherwise.
In other words, if the records don't exist, the burden can shift to the employer.
Without reliable time records, it can become incredibly difficult to challenge someone's recollection of events that occurred years earlier.
The cost of missing information
One thing I have learnt through remediation projects is that poor record keeping creates uncertainty.
It makes compliance reviews more difficult, increases the amount of judgement and assumptions required, and ultimately increases risk.
I have seen organisations invest hundreds of hours trying to reconstruct work patterns that could have been confirmed in seconds if compliant time records had been maintained from the beginning.
The irony is that organisations often spend far more time trying to recreate history than it would have taken to record it accurately in the first place.
It might be time to ask the question
If your organisation relies on timesheets, it's worth asking whether they capture everything they need to.
Are employees recording their actual start and finish times?
Are paid and unpaid meal breaks being recorded?
Are overtime hours accurately documented?
Where the applicable modern award requires employee signed records, are those acknowledgements being obtained?
If Fair Work asked for your time records tomorrow, or you found yourself undertaking a remediation several years from now, would your records provide the evidence you need?
Payroll has always been about paying people correctly.
Increasingly, the organisations that manage risk best are those that can prove they did.