Since last July labour inspectors have issued more than $370,000 in fines and more than 130 infringement notices to businesses who have failed to keep or maintain employee records. Those numbers look likely to increase if the Labour Government moves forward in doubling the number of labour inspectors over the next three years.  Unsurprisingly it is the hospitality and horticulture industries which are tagged as the worst record keeping offenders.

Good record keeping protects the employer in the case of a dispute and ensures that an employee’s entitlements are correctly met.  The key requirement in the legislation is that employers should be able to produce a record of the number of hours worked by employees each day in a pay period, and the pay for those hours. This should be in an easily accessible format on request from an employee or from a labour inspector. Employers will have flexibility as to what form this record takes.

Employers must keep wage and time, and holidays and leave records that comply with the legislation and, in particular, be able to show that they have complied with all minimum employment entitlements such as the minimum wage and annual holidays. 

Good record-keeping makes sure that an employee's pay and leave are correct, prevents misunderstandings and protects the employer and the employee if there is a dispute. Your employees have the right to know everything you are recording on their file and have the right to see these records.

While all the record-keeping requirements may not seem necessary, all these components are required so that a clear picture can be developed of each day in an employee’s year, ie which days were worked, not worked, on leave and if so, which type, and what was paid in relation to each and so on. This is used to calculate accurately different types of pay (eg average weekly pay, ordinary weekly pay, relevant daily pay and average daily pay) for the purposes of holiday leave, parental leave and parental leave payments etc.

For employers with fully computerised payroll software, maintaining the records can be relatively easy, although it is important that employers keep an active oversight of their payroll system to ensure that it accurately records any changes to employees’ hours and pay – particularly unexpected ones. For employers with manual systems, it can be harder to make sure all the components are being recorded.

Employers must keep accurate records of wages and time, holidays and leave and other details

Employers can keep records on paper or electronically (as long as the information can be accessed easily and converted into written form).

Employers must keep wages and time records and holiday and leave records for 6 years (even if the employee has left). Employers must also keep a signed copy of the employment agreement or current signed terms and conditions (and they must give a copy to employees if they ask for their copy).

If an employer doesn’t keep all the accurate wage and time, and holidays and leave records required by the Employment Relations Act 2000 and the Holidays Act 2003:

  • the Employment Relations Authority or a Labour Inspector, may impose a penalty on them. This could be up to $50,000 for an individual; or for a company, the greater of $100,000 or 3 times the amount of the financial gain made, or
  • a Labour Inspector can issue an infringement notice for breach of the record keeping requirements (an infringement offence).

Specific details of what employers must record and keep for each employee:

  • their name, postal address, age (if under 20 years) and the date they started working for you
  • whether they are on an individual employment agreement or a collective agreement (and the title and expiry date of the agreement and the employee’s classification), and a copy of the agreement.
  • the kind of work they are employed for
  • the number of hours worked each day in a pay period and the pay for those hours. If an employee’s number of hours worked each day in a pay period and the pay for those hours are agreed and the employee works those usual hours, then a statement of those usual hours and pay will be enough (this could be as stated in the wages and time record or employment agreement or a roster or any other document or record normally used in the course of employment). For a salaried employee, the usual hours include any additional hours worked that are consistent with the employment agreement. However, an employer must record additional hours if that record is necessary to meet the obligation to have records in sufficient detail to demonstrate compliance with minimum entitlements.
  • details of any employment relations education leave taken
  • the wages paid to the employee each pay period and how these have been calculated
  • the dates on which the employee last became entitled to annual holidays and sick leave and their current entitlement to annual holidays and sick leave
  • the dates of leave taken, including annual holidays, sick leave and bereavement, and payment received for each
  • the portion of any annual leave cashed up as well as the date and amount paid, for each entitlement year
  • the dates and number of hours worked on public holidays and the payment made for these, and the date (or 24-hour period) to which the public holiday or any part of it has been transferred to, and the date on which the employee became entitled to any alternative holiday (day in lieu)
  • the dates of, and payments for, any public holiday or alternative holiday on which the employee didn’t work, but had an entitlement to holiday pay
  • the cash value of any alternative holidays they gave up for payment
  • the cash value for any board and lodgings provided
  • the date of termination of employment, and the amount of pay for holidays they received on termination of employment
  • a copy of employees’ tax code declaration (IR330)

Employers should also keep:

  • records of all wage deductions, such as PAYE, student loan deductions and superannuation contributions and any agreements for wage deductions.
  • requests to transfer public holidays (and whether or not these were agreed to)
  • requests to cash up annual holidays (and whether or not these were agreed to)
  • the dates that any additional provisions in your employee’s employment agreement take effect
  • records of the date on which the employee becomes entitled to sick and bereavement leave (to avoid disputes).
  • evidence of compliance with health and safety obligations
  • evidence of rest and meal breaks provided (or compensation for these)
  • a copy of employee personal contact details, such as their email addresses, home phone number and mobile number if they want to provide these.
  • in case of emergency (ICE) contact details
  • the employee's bank account details if this is how you both agree the employee will be paid
  • the details of employees’ work permits, if applicable.

More information on record keeping can be found on www.employment.govt.nz