Fines, lawsuits, & audits: The impact of poor record-keeping

Proper record-keeping is a must for Australian employers, yet it’s often overlooked. Serious consequences can result from poor record-keeping practices, whether it’s missing employee records, incomplete timesheets, or incorrect payroll documentation. 

In recent years, organisations of all sizes have been penalised for inadequate records. Some have been required to pay back employees, while others have incurred hefty fines for failing to maintain accurate payroll and tax records. 

In this article, we’ll discuss where businesses are falling short of proper record-keeping, why this is the case, and how to get back on track with strong records that leave them in a better position.

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Why businesses have poor record-keeping

If record-keeping is so vital and at the core of labour compliance, why are employers still facing challenges with it? Sometimes, it’s a result of outdated or split systems that don’t maintain a single source of truth, and other times, it’s intentional to cover up non-compliance.

The thing with poor record-keeping habits is that it’s not always deliberate. Most businesses want to do right by their employees and meet their legal obligations. But keeping records can be admin-heavy, and without the right systems in place, things can easily slip through the cracks. There’s several factors that can lead to unintentional poor record-keeping: 

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Reports and data scattered between multiple systems

If you’re using multiple systems for HR, rostering, time and attendance tracking, and payroll, chances are vital employee and pay data are scattered across different places. And that’s a record-keeping problem waiting to happen.

Managing every stage of the employee lifecycle is interconnected. When processes involved are operating in silos, data can become disjointed, increasing the risk of inaccuracies, missing information, and compliance issues.

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Over-reliance on physical records

Relying solely on paper records is a significant risk. Paper files are hard to organise, easy to misplace, and vulnerable to damage. Losing records due to fire, flooding, or simple mismanagement would mean you’re unable to provide certain information or prove details of an agreement should Fair Work come knocking. 

Switching to a digital record-keeping system is the best way to go, and having all data in one centralised platform improves accuracy and accessibility. 

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Lack of awareness of your obligations

It’s not uncommon for businesses to be unaware of key reporting and record-keeping obligations, with mandates coming from multiple different governing bodies. 

For example, employers must keep employee records for at least 7 years under the Fair Work Act 2009, and this includes pay records, hours of work, superannuation contributions, tax and PAYG withholdings, termination details, individual flexibility agreements, and agreements on annual leave taken in advance. 

And it’s not a one-size-fits-all situation either. The Australian Taxation Office (ATO) record-keeping requirements mandate employers to keep most records for 5 years, including records of tax-related transactions as well as business income and expenses. However, how the five years are counted depends on the record type. For instance, for super contributions, the count will begin from the date of contribution. These records must be readily available in case of an ATO audit.

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Inconsistency between people and systems 

Businesses with multiple reporting departments like finance, HR, and payroll, will naturally develop inconsistencies between how records are collected and stored. Lack of visibility between teams, unclear reporting standards, and constantly changing processes will only exacerbate the situation. 

For example, payroll might store records based on an employee’s payroll ID and surname, while HR might sort them based on first name and surname. 

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Intentionally maintaining poor records

When businesses intentionally maintain poor or inaccurate records, it can quickly be considered falsifying records. 

A common motive for this is reducing employee costs and avoiding payroll obligations. Some businesses falsify timesheets to underpay employees, while others misclassify workers as independent contractors to sidestep minimum wage laws, leave entitlements, and superannuation. 

Meanwhile, others manipulate records to evade detection by regulatory agencies. Some even go so far as to keeping two sets of records, one real for internal use and a falsified version for audits. Businesses may alter time logs, underreport work hours, or issue fake payslips to avoid overtime and penalty rates. Some even pay in cash without reporting wages to the ATO or Fair Work, keeping employees off the books and reducing tax obligations. 

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The impact of falsifying records

Maintaining inaccurate records can cost organisations millions. In a recent case, a retailer in New South Wales and the ACT was hit with $5,146,100 in court penalties after exploiting vulnerable workers and providing false records to Fair Work inspectors. In addition to the fines, the court also ordered back payments to workers, plus superannuation and interest. 

On January 1st, 2025, the intentional underpayment of wages became a criminal offence. While honest mistakes aren’t included in the legislation, falsified records to cover up underpayments could be enough to prove the action was intentional.

Beyond the financial blow, falling into the wrong side of labour compliance can also bring other headaches, such as damage to the business reputation and extra administrative burden with audits and investigations.

Should a business continue trade after being investigated and penalised, it’s not uncommon for Fair Work inspectors to retarget them, with the idea being if they’ve done it once, they might do it again.

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Why you should prioritise good record-keeping practices

Prioritising proper record-keeping practices isn’t just about ticking compliance boxes; it’s vital for overall business success. More than avoiding penalties and legal disputes, proper record-keeping minimises the administrative burden on your managers and HR, freeing them up for more productive tasks.

Here’s why staying on top of record-keeping should be a priority for your business:

Ensuring employee entitlements and payroll accuracy

Accurate records prevent underpayment and wage miscalculations. Keeping detailed records ensures employees receive correct pay, including overtime, superannuation, and leave entitlements. Since payroll relies on accurate data, good record-keeping is key to avoiding disputes, underpayment claims, and wage theft allegations. 

Meeting mandatory reporting requirements

Businesses in Australia are subject to mandatory reporting obligations, such as: 

• Single Touch Payroll (STP) reporting: Employers must report payroll details (including wages, PAYG withholding, and superannuation) to the ATO using STP-enabled payroll software on or before payday.

• WGEA Gender Equality reporting: WGEA reports are mandatory annual reports that employers with 100 or more staff must submit to the Workplace Gender Equality Agency (WGEA). These reports cover workforce composition, pay equity, gender policies, and leadership representation to track and promote workplace gender equality. Reports must be submitted between April 1 and May 31, and employers have 28 days to edit them after submission. 
  

• Reportable superannuation contributions - Are you making extra super contributions on top of the required minimum or Super Guarantee? If so, that’s considered reportable employer super contributions (RESC) and must be reported even if they’re not part of an employee’s taxable income. However, employers don’t need to report additional super contributions if they are done for administrative ease, such as rounding up super payments or if there’s a written policy preventing employees from influencing super contributions.
  
  

Protection in disputes and audits

Having clear, well-organised records makes it easier to resolve disputes. Say an employee is claiming that they’re underpaid. When you have your records properly kept, you can easily pull information that shows what was paid and when.

From a HR perspective, if a former employee were to claim unfair dismissal, records of written warnings and summaries of verbal conversations will significantly help in proving your case as an employer.

Good record-keeping also keeps you prepared for ATO audits. The ATO may request payroll, tax, and superannuation records for review. If your records are complete and accessible, you can comply and respond quickly.

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Better business decision-making

Beyond compliance, strong record-keeping supports better decision-making. With complete and up-to-date data, you can more effectively budget for wages and overtime, evaluate employee benefits, and identify growth opportunities. 

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Best practices for record-keeping

Prioritising proper record-keeping is a must for organisations, but let’s be honest, it’s easier said than done. With so many records to maintain, filing and reporting requirements can feel overwhelming. The good news? There are ways to simplify the process.

Use an all-in-one system

If you’re managing employee records across multiple platforms, it’s nearly impossible to maintain a single source of truth. That’s why the best approach is to use an all-in-one system for HR, time tracking, and payroll.

Tanda is an all-in-one platform that captures employee data from onboarding through payroll. It ensures employee records are always accurate and up to date, and information is synced across rostering, time tracking, and payroll. There’s no need for manual data entry, reducing errors and compliance risks.  

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Streamline reporting

Handling multiple mandatory reports can be time-consuming, but the right system can automate the process. 

With Tanda’s reporting system, you can automatically generate reports, eliminate manual data extraction, reduce errors, and customise reports based on workforce, payroll, or compliance needs.

Tanda’s reporting system provides ready-made report templates for:

• Time and attendance, shift compliance, labour costs, and overtime
• Workforce metrics such as qualifications, pay rate changes, and shift feedback
• Payroll metrics such as super accruals, payroll costs, leave, and tax calculations
• Performance reviews, incidents, forms and warnings

You can also create custom reports, apply conditional formatting, and set thresholds for better insights. Reports can also be added to your dashboard for quick access, making it easier to meet reporting deadlines.

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Retain data according to compliance requirements

Under Australian law, employers must keep employee records for at least 5 to 30 years, depending on the type of data.

Use a secure, cloud-based system. Paper records alone will not cut it. It’s also essential to set up automated retention policies to ensure documents are stored for the correct period. Lastly, make records easily accessible so you can retrieve them if requested by the ATO, Fair Work Ombudsman, or WHS regulators.

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Keep track of audit trails and historical changes

Employee records aren’t static. They change over time. Businesses must have a system that logs audits and tracks changes made historically, including pay changes, super contributions, tax lodgments, leave balances and entitlements. 

Tanda’s system automatically timestamps and tracks changes, ensuring data integrity. Access controls and backup features further protect records from tampering or accidental loss.

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Tanda helps you stay compliant with record-keeping requirements

Managing record-keeping requirements can be complicated, but Tanda simplifies the process.

Tanda’s all-in-one system can help you navigate through different business and employee records and ensure that you’re complying with record-keeping obligations as stated by Fair Work, ATO, and other governing bodies.

You can capture and store employee details, record time and pay details, manage award-specific rules, and keep track of proper documentation, all within Tanda’s system. There’s no need to move from one platform to another. All data is housed in a single platform, which significantly saves time and reduces potential risks and errors. 

Beyond record-keeping and reporting, Tanda has helped organisations manage hourly teams, stay on top of awards, and handle the most complex employment conditions. Discover how Tanda can help you today.