Australian employers need to make a New Year’s resolution to keep detailed and thorough records of information about their employees, to avoid the potential for hefty penalties from Fair Work Australia, according to law firm ClarkeKann.

In a new briefing note on record-keeping and privacy obligations for employers (Available HERE ), ClarkeKann highlighted a recent case where a firm attracted a substantial penalty for contravention of its record keeping obligation.

The Australian Building and Construction Commissioner had taken action in the federal court in 2010 against Professional Gyprock  Solution, a firm that provided services to the WA construction industry.

The Court imposed a $A16,000 penalty upon the employer for, among other things, keeping false and misleading employee records (rate of remuneration, gross and net amounts paid, leave accrual and superannuation contributions) and failing to keep pay records.  Whilst the Court accepted that the employer did not intend to contravene the provisions, the employer was found to be negligent in its record keeping conduct.  

Under the Fair Work Regulations, employers must keep, and retain for seven years, employee records in relation to each of its employees.  These records must be: 
.  readily accessible to a Fair Work inspector; 
.  in a legible form;  
.  accurate at all times;
.  not false or misleading as to the employer’s  knowledge;
.  not altered unless for the purposes of correcting an  error.

The Regulations prescribe the information to be contained in the employee records, including: 
.  basic employment details such as the name of the  employer and the employee and the nature of their  employment; 
.  pay; 
.  overtime hours;
.  averaging arrangements;
.  leave entitlements; 
.  superannuation contributions; 
.  termination of employment (where applicable); 
.  individual flexibility arrangements and guarantees  of annual earnings.

Privacy
The application of federal legislation may also impact on an employer’s record keeping obligations. Commonwealth Privacy laws require that all Commonwealth and ACT public sector employers comply with the National Privacy Principles (NPPs) when dealing with personal information. 

However, the Act only applies to private sector employers that satisfy one of the following criteria: 
.  annual turnover of more than $A3 million; or
.  in the business of dealing with health information  or distributing personal information for gain.   

Furthermore, employers covered by the Act are exempt from complying with the NPPs if the act done, or practice  engaged in, directly relates to: 
.  a current or former employment relationship  between the employer and an individual; and 
.  an ‘employee record’ held by the organisation and  relating to the individual. 

Whilst a list of information defined as an employee record for the purposes of the Act is beyond the scope of this article, it is important to note that the definition is broad and  includes a range of personal information relating to the  employment of the employee such as the employee’s  health, training and termination of employment details.  
Despite the breadth of the ‘employee record’ exemption, employers may still be caught by the compliance  requirements set out in the NPPs if: 
.  the employee record is used in a manner that is  not directly related to the employment relationship;  or 
.  the information gathered by or accessible to the  employer falls outside the definition of ‘employee  record’ (i.e. personal emails sent on work  computers and records of internet browsing); or the information collected, used, stored or disposed of is in relation to a future employment relationship  (i.e. information obtained from job applicants).  

NSW Surveillance Act 

New South Wales employers should also be aware of the Workplace Surveillance Act which regulates camera, computer and tracking surveillance in the workplace.  The Act requires that employers provide 14 days’ notice, as prescribed by the Act, prior to undertaking surveillance measures.  There is currently no equivalent surveillance legislation in Queensland. 

Common law breach 

Employers who deal inappropriately with private or sensitive employee information may find themselves subject to a potential claim for common law breach of privacy and/or wrongful disclosure of confidential information.  

In some cases there may be limited legal obligation on an employer in relation to the collection and distribution of employee records.  Due to the increasing sensitivity of information collected by employers however, the adoption of best practice measures is essential to ensure employees remain confident and secure in their workplace.  
Employers should: 
. develop and distribute a privacy policy which  informs employees of the personal information  collected, how it is collected and the purpose for  collection; 
. develop and distribute a policy setting out  appropriate email and internet use.  This will be particularly important in NSW;
. only collect and retain information about an  employee that is necessary; 
. ensure all employee records are kept in a secure  way; 
. only provide personal information to a third party in  accordance with statutory requirements or with the  consent of the employee in question (for instance,  confirming an employee’s details to a bank or a  letting agent); 
. treat personal information in accordance with the  NPPs; 
. inform employees when personal information is being collected; allow employees access to personal information about themselves.

For more information contact Belinda Weir, Partner ClarkeKann Phone: 61 7 3001 9268 email: b.weir@clarkekann.com.au