Employers are legally required to give every employee a payslip, and within one working day of the pay being received. Payslips are no longer legally able to be handwritten. If an employee was seeking a loan, perhaps a personal loan, and the lender required 2 or 3 consecutive payslips, they will not accept a handwritten slip for obvious reasons.
So, what do you need to consider when it comes to payslips?
Most payslips these days are generated by computer software, either in house from the company computer system, or from an external business, where the payment of employees has been outsourced to a provider. Often, such systems use software such as MYOB or XERO to automate the issuing of payslips using data input by the operators.
Such payslips may be delivered to the employee in printed form or electronically. Either method complies with the legal requirements, provided the employee has easy access. The payslip must be actually sent to the employee – it is not sufficient to simply allow access through an online portal, or cloud storage system.
The Fair Work Act 2009 and the Fair Work Regulations 2009 specify the details required on a payslip:
- Employer name (and ABN if applicable)
- Employee name
- Pay period
- Date of payment
- Gross pay (before tax) and net pay (after tax)
- Loadings, allowances, bonuses, penalty rates and other payments
Depending upon the circumstances, other inclusions may be:
- Superannuation – amount of contribution, name of fund
- If paid hourly – ordinary hourly rate, number of hours, amount paid at that rate
- If paid at annual rate – the annual rate as of the last day of the pay period
The above-mentioned software programs, and other purpose-built applications will track employee entitlements for annual leave, long-service leave and the like and will include that information on payslip advice. However, while that is not a legal requirement, it is often considered best practice by employers, and is a recommendation of the Fair Work Ombudsman. Nevertheless, if an employee asks what their current entitlement is, then they are required to be informed.
The age of computers has meant that employee records such as payslips can easily be stored electronically, with appropriate backup of data, both onsite and offsite. This avoids the need for storerooms full of paperwork. This is a good thing, as these records are required to be kept for 7 years.
Fair Work Inspectors
Running a business can be extremely demanding, often it may feel like spinning plates with no end in sight. Oversights can and do happen. Fair Work Inspectors may check on the veracity of a firm’s pay system, particularly if issues have been raised by employees. Penalties can apply, not only for the business, but for managers and accounting staff involved in the errors. If breaches are seen to be part of a regular pattern, then the court may increase the penalties considerably.