Court punishes employer for failure to give out payslips

Case reminds HR of the importance of one of the most basic documents

Court punishes employer for failure to give out payslips

The Federal Circuit and Family Court of Australia (FCFCOA) had recently held a company at fault for failing to provide payslips to its employees.

The court had once again reminded employers of the importance of payslips in an employment relationship. Learn why HR should not skip complying with the said requirement during payday.

The employer, in this case, is a convenience store operator, and it was sued with another company for underpayment of their employees. Both shared a common corporate director and secretary who served in each company at different periods.

The employer had staff to sell goods and maintain stock and displays. The employees’ award covered a casual minimum wage, overtime allowances, loadings for Sunday and public holiday hours, and other loadings relating to the casual nature of the employment and the hours worked.

In 2019, the Fair Work Ombudsman directed an FW inspector to investigate if the companies were complying with the award, but the latter discovered violations, including the employer’s failure to provide payslips on specific months.

The importance of payslips

An employer must provide payslips or risk a violation under Section 536(1) of the FW Act. The provision states: “An employer must give a pay slip to each of its employees within one working day of paying an amount to the employee in relation to the performance of work.

According to the court, payslips enable both employees and employers to know their respective entitlements and responsibilities under an applicable award.

“They assist employers to turn their minds to how wages are to be calculated, and allow the relevant employees to know the basis on which wages have been calculated, and allow them to reference their own records so that any irregularities can be promptly challenged and if established quickly rectified,” the decision said.

The court also emphasised that the whole industrial wage system and its enforcement are “based on contemporaneous and accurate record keeping,” stressing that such systems also enable the industrial regulator to investigate any complaints of underpayment efficiently.

“The provision of appropriate and correct payslips is an essential component of a fair system of wage regulation,” the court said. “Employees, particularly vulnerable ones, are entitled to know what they have been paid and how specifically their wages are broken down. They also need to know who formally is employing them to pursue any queries arising from their employment and, if necessary, seek redress from the appropriate source,” it explained.

The court further pointed out that employees “need to know” the payslips’ information promptly to clarify areas of uncertainty and sort out any misunderstandings. “On a basic level, they need to be able to budget and make properly informed decisions about whether they will elect to continue to work in a particular manner, such as on weekends and at nighttime,” the court said.

“Without proper payslips, employees are significantly disempowered, creating a structure within which breaches of the industrial laws can easily be perpetrated,” the court said.

Thus, the employers suffered penalties due to their violations. The judgment was handed down on 13 May.

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