Are You Required to Give Your Employees Payslips?

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Table of Contents

• Do I Need to Provide Pay Slips?
• How Can I Issue Pay Slips?
• What Should Be Included on Payslips?
• What Happens if I Do Not Issue Payslips?
• Other Obligations
• Key Takeaways

As an employer, you must, by law, provide your employees with pay slips. Additionally, there are rules that govern the content you must include in your employees’ payslips. This article will answer five key questions employers commonly ask about payslips to help you meet your obligations. 

Do I Need to Provide Pay Slips?

It is a legal requirement to issue payslips to your employees within one working day of you making their payment. You must do this even if your employee is on leave. 

There are consequences if you do not provide payslips with accurate information or if you do not supply them to your employees on time.

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How Can I Issue Pay Slips?

First, you can issue payslips in an electronic form or hard copy. Suppose you issue payslips through an electronic form. In that case, you may send it to the employee’s personal email address or the employee’s payroll account, such as on an application like Xero.

Which method you use will depend on your business type and what your employees may access easily. For example, a worker may not have easy access to email if they work in a remote location where the internet is not readily available. In this instance, an employer should issue payslips in a printed format.

What Should Be Included on Payslips?

Regardless of whether you provide payslips as an electronic or hard copy, you must include: 

• your name and the employee’s name;
• your Australian Business Number (if applicable);
• the applicable pay period;
• the date of payment;
• the employee’s gross and net pay;
• the rate of pay;
• any loadings (including casual loading), allowances, bonuses, incentive-based payments, penalty rates, overtime or other paid entitlements;
• any deductions from the employee’s pay, including the amount and fund account the deduction was paid into; and 
• superannuation contributions, including the amounts and superannuation fund the contributions were made to. 

If you pay the employee at an hourly rate, you must break the payment down into the: 

• ordinary hourly rate;
• number of hours worked at that rate; and
• total dollar amount of pay at that rate. 

Notes

It is useful to have a notes section where you can outline specific information that may be relevant to your employee’s work for your business. 

For instance, if you have a casual employee and the casual loading is not separated out in the payslip, you can state that the hourly rate incorporates the casual loading. Notes are useful when an employee alleges they have not received casual loading. In that case, you will be able to use the payslip as evidence. 

Deductions 

Before making any deductions from an employee’s pay, seek advice that you are allowed to take the deduction. 

Under the Fair Work Act, there are rules about making authorised deductions. For example, the employee must have authorised the deduction in writing, and the deduction is for the employee’s benefit. 

Leave Balance

You are obligated to record any leave taken by an employee and their leave balances. However, you are not required to put this on the payslip. Nevertheless, it is considered best practice to include the leave balance on each payslip to aid communication between you and your employee. 

What Happens if I Do Not Issue Payslips?

There are a few possible risks when you fail to issue payslips or put the wrong information on them. 

Failure to Issue Payslips 

If you fail to issue payslips, your employee may make a complaint to the Fair Work Ombudsman (‘Ombudsman’).

The Ombudsman is an organisation whose role is to investigate and enforce the correct payment of wages for employees. Fair Work Inspectors investigate when the Ombudsman receives a complaint.

If the Fair Work Inspector discovers a failure to issue payslips at all or not on time, they may issue you with an infringement notice for failing to meet their record-keeping and pay slip obligations. An infringement notice is similar to an on-the-spot fine, and you have 28 days to pay the penalty.

It is important to note that it is not just the business that may be issued a fine. You, in your personal capacity, may also be fined for not providing payslips. 

The current maximum fines payable in an infringement notice are, for each separate contravention:

• $1,332 for an individual; and
• $6,660 for a company.

If the Fair Work Inspector believes that you have wilfully or repetitively not provided payslips, they may take the matter to court.

The maximum penalties a court may impose for serious record-keeping and pay slip contraventions are, per contravention:

• $133,200 for an individual; or
• $666,000 for a corporation.

False or Misleading Payslips 

You must not give pay slips to an employee or to the Fair Work Ombudsman that you know to be false or misleading. For example, you cannot omit information that would make the payslip false or misleading.

Underpayment Risk 

Practically, where you do not provide payslips or keep records, it may be difficult or impossible to disprove an employee when they make claims regarding underpayment. In addition, this will cause you to lose valuable working time in attempting to backtrack to develop records and money to backpay the employee. 

When an employer does not have records, the Ombudsman will rely on the employee’s records, even if you are adamant that you are incorrect. Therefore, it is important to provide payslips and keep records. 

Other Obligations

At the end of the financial year, you must give employees a Pay As You Go (PAYG) summary. This payment summary is an extra payslip that the Australian Taxation Office requires, and it records your full year’s worth of pay to your employee. 

If you do not have Single Touch Payroll, you must provide your employees with the PAYG summary. However, if you have Single Touch Payroll, you do not have to give your employees their PAYG summary, as they can access it through their myGov account.

You should advise employees whether you will be providing them with their PAYG summary or if they can access it through their myGov account. 

Key Takeaways

You must provide payslips to your employees when due and ensure that they reflect the required information. If you want to make deductions from your employee’s pay, it must be a reasonable and valid deduction and properly reflected on their pay slip. When you fail to issue payslips, you risk major financial consequences. If you need assistance in understanding payslips, our experienced employment lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.