4. So What Should Organisations Do?
The ‘reverse onus of proof’ is a further burden on employers. If an employer is accused of a breach of the FWA (e.g. underpayment of staff), and has not kept the prescribed records, the ‘onus of proof’ (the presumption of innocence) is flipped.
Multi-million dollar penalties, an active
regulator, the Fair Work Act’s ‘reverse onus’, and a complex state-based LSL overlay have created a challenging and high- stakes employment compliance landscape for businesses and organisations. If not already, payroll and record-keeping obligations should be treated as a legal and operational risk priority. We have been advising clients to address record- keeping proactively and not wait for issues to arise. Organisations should be testing their payroll record keeping and the associated systems and processes for legal compliance, particularly whenever there is a change, e.g. from new legislation, updated awards, new enterprise agreements, or
entitlements, which are mandated federally, LSL is governed by state-based legislation, and the rules vary considerably. For instance, Victoria, Western Australia, South Australia, and Tasmania require records to be kept for seven years, while NSW, Queensland, ACT, and Northern Territory only require six years. Further, each state mandates different approaches to calculating employee entitlements that impact record- keeping. Arguably, the most onerous is Victoria’s Long Service Leave Act 2018 (Vic). Victoria requires employers to calculate LSL entitlements for certain employees (where the ordinary rate of pay is not fixed, where
weekly hours are not fixed or where hours have changed in the prior 2 years) by averaging the employee’s pay rate/ hours over 2 years, 5 years or their lifetime favourable outcome. This last requirement poses a real practical issue: how to perform an accurate lifetime averaging calculation, where records are generally only kept for 7 years, and legacy systems may not be easy to interrogate. In addition, the various LSL acts also contain their own range of penalties and regulatory enforcement approaches, which again, vary considerably from state to state. and then selecting the most employee
introducing new payroll systems.
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ISSUE 13 GLOBAL PAYROLL MAGAZINE
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