What do you do when an employee forgets to submit a timesheet? Should you pay them anyway and catch up later or should you withhold their pay until a timesheet is submitted?
In every business, there is always at least one employee who is terrible at paperwork. They are always the last to submit reports, sick forms and timesheets, no matter how often they are reminded. We will leave aside the armchair psychoanalytics as to why they behave that way and will look at some of the issues around how to remedy the behaviour.
Why You Need Timesheets: Fair Work Requirements
Under the Fair Work Act and other related workplace and health and safety legislation, you are required to keep accurate records of all time worked for each employee.
These records must be in English, legible, in a form able to be inspected by a Fair Work Inspector, not be altered unless correcting an error and retained for seven years.
Records relating to hours worked by employees are to include the following:
- In the case of a casual or irregular part-time employee who is guaranteed a pay rate set by reference to time worked, a record of the hours worked by that employee.
- For any other type of employee, the record must specify the number of overtime hours worked each day, or when the employee started and finished working overtime hours (but only if a penalty rate or loading must be paid for overtime hours actually worked).
If you don’t have records when the Fair Work Inspectors come to call, you may be issued with an infringement notice (on-the-spot fine).
The maximum fines payable from an infringement notice are:
- $630 PER CONTRAVENTION – for an individual
- $3150 PER CONTRAVENTION – for a body corporate
If the Inspectors believe your record keeping failures are serious, wilful or repetitive, they may recommend the matter be taken to court where the fines are significantly more substantial.
For example, a hotel was fined over $60,000 for making five casuals record meal breaks they had not received, and a cafe fined $37,500 for serious timesheet recording issues.
Why You Need Timesheets: Financial Requirements
Consider your normal day-to-day business operations. If someone told you that they had bought an item for the office worth $800 you would need to see a receipt before you reimbursed them for it. You would do the same if they asked to be reimbursed from petty cash for buying a bottle of milk on the way to work.
In your normal business, you require proof before you reimburse someone for expenditure. Wages are simply reimbursement for time worked, so you need to see proof.
If you don’t have proof, how do you know whether someone has worked overtime, was sick or on annual leave? You are paying on a guess that everything was the same as previous weeks. You may inadvertently overpay the worker, and then face the battle of regaining the overpaid amounts.
What to do about non-submitters?
This is where we head into grey employment relations territory. You cannot legally withhold pays that people are entitled to, but the catch 22 is how do you know what they are legally entitled to without a timesheet?
In practice, many businesses have policies that state that if no timesheet is submitted by the payroll cut-off time, then the pay for that person will be withheld until the timesheet is submitted. Businesses then either run an out-of-cycle pay for that person or hold over the pay until the following pay run. This is the most strategy adopted for casual employees or contractors.
Other payroll teams pay the person ordinary agreed hours, but then hound the person until the timesheets are submitted (and simply hope that there is no inspection or overpayment recovery is needed as that opens up a whole new can of worms). This strategy is more commonly adopted for full time or part time employees.
There is no hard and fast rule, and what you choose to do reflects your workplace culture and business practices.
Old fashioned Bundy clocks, fingerprint scanners or building access passes linked to timesheets all are options to consider rather than traditional pen and paper or online timesheet systems.
Many businesses are moving to geolocation type apps to help deal with forgetful employees (Fair Work has a free app https://www.fairwork.gov.au/how-we-will-help/how-we-help-you/record-my-hours-app) that can help staff keep track of their hours).
The bottom line is that it is your business’s responsibility to ensure that time and wages records are accurate. If you don’t, then you face major penalties.