Employers may have failed to keep up with the latest updates to modern awards, or miscalculated superannuation payments. In cases of underpayment, employees can file an unpaid wages claim with the Fair Work Ombudsman.

During this claim, employers will be required to produce time and wage records. Not being able to do so may result in reverse onus of proof, where an employer is essentially presumed guilty until proven innocent. Because of this, failing to meet obligations for record keeping for small businesses can be costly. 

So what is reverse onus of proof? And how can employers ensure they meet their record keeping requirements?

What is reverse onus of proof?

Reverse onus of proof was introduced in a 2017 amendment to the Fair Work Act, and is designed to protect vulnerable workers. It was introduced after a number of high-profile businesses avoided Fair Work unpaid wages claims by destroying employment records. 

This change applies to employees claiming unpaid wages from government and organisations, either for salary or the underpayment of superannuation. If the employer can’t produce wage records, the court will presume the employee was underpaid unless the employer can prove otherwise. 

Reverse onus of proof essentially puts the blame back on employers in cases of underpayment. This is because employers are obligated to maintain accurate time and wage records under the Fair Work Act.

Employer wage records obligations

Under the Fair Work Act 2009, employers must make and keep accurate and complete records of their employees. This includes the hours of work, and the wages they were paid (including taxes and superannuation contributions). In addition, employers must provide employees with pay slips in a timely manner.

These records should be written in English, and in a form that’s easily accessible if requested by a Fair Work Inspector. They can’t be knowingly false or misleading, and can’t be altered unless it’s to correct an error. Time and wage records should remain private and confidential.

How long should employee wage records be kept?

At a minimum, employee wage records must be kept for seven years.

What happens if employers fail to meet their record keeping obligations?

The FWO may discover an employer has failed to meet their record keeping requirements during an audit. Employees may also file an unpaid wages complaint. 

Depending on the case, employers may be issued with an infringement notice and be required to pay a fine. However, in more serious cases, the inspector may recommend the case is taken to court. In this case, reverse onus of proof may apply.

The maximum fines payable by an infringement notice are $1,260 per offence for individuals, and $6,300 per offence for a corporation. In court, this increases to $12,600 per individual offence and $63,000 per corporation offence. 

In serious cases where underpayment occurred knowingly, employers may be required to pay up to $126,000 per offence for individual employees. This amount increases to $630,000 per offence for corporations.