Recently, Tanda released a Webinar discussing the five most common reasons businesses disclose underpayments to the Fair Work Ombudsman.
Tanda is also releasing an article on each of the five issues, to assist the community in developing a broader understanding of the Ombudsman’s priorities.
This piece will focus on a simple, yet fatal compliance issue: poor time recording practices in Australia.
Fair Work Compliance Action
The Australian Fair Work Ombudsman has ramped up compliance action in the last year, after taking a step back during the height of the Covid pandemic. The Ombudsman’s top focus is underpayments in Australia, and it has recovered more than $140 million from business Australia-wide in the last financial year alone.
Failing to have proper time recording processes in place could expose your business to underpayment claims. The majority of Australian workers are paid by the hour. If you can’t prove how many hours your employees are working, you’re very exposed to an underpayment claim.
Poor Time Recording Practices
Digital technology has revolutionised the way businesses handle their payroll in recent years. However, those who haven’t changed their systems risk being left behind. In its 2021 Annual Report, the Fair Work Ombudsman identified poor time recording practices as “ineffective and outdated manual processes for recording hours of work, or not keeping records of time worked at all for employees covered by Fair Work instruments”.
In other words, Fair Work believes having old, manual processes is high risk and likely to lead to underpayment in Australian businesses. This is reflected in Fair Work’s attitude towards compliance. The Ombudsman’s biggest targets are businesses that don’t record hours at all, or have outdated systems for doing so.
The Ombudsman hasn’t just targeted businesses that are obviously dodgy. In recent years, large ASX-listed companies that employ professionals have also gotten into trouble for having poor time recording practices. Australian professionals are increasingly valuing flexibility and work-life balance. This has seen many employees work different types of hours than has typically been the case and can make monitoring work times more difficult – it can be hard to see exactly when employees are working if they’re at home, or work outside of typical office hours.
Addressing this issue requires managers to use nuance and professional judgement. The most straightforward solution is to use modern digital technology to monitor time and attendance for your employees. Cloud computing software will not only ensure accuracy, but it will also keep attendance records for the required seven years, ensuring you don’t get into trouble with Fair Work.
However, time clocks might not be appropriate for all employees and all circumstances. Some employees in professional environments have objected to operating in this way. Finding a digital balance here is sensible, e.g. having employees confirm that they worked standard hours, or pre-populating timesheets for employees to approve for themselves might be a reasonable compromise provided employees are genuinely free to reflect their actual hours.
Some companies have embraced “half-way” solutions to solve the issue, like recording employee login times on computers, or using security passes to calculate working hours. These solutions are error-prone and are at best proxies for working hours. For example, an employee could come into work to pick up their computer on a weekend, buzzing through the security system, or they could work from home most days of the week, not coming into the office at all. It’s recommended to invest in a proper, proven solution time recording solution.