Quick Summary
Quick Summary
- The Fair Work Ombudsman recovered $453 million in underpayments for 181,000 workers in 2025-26, up 27% from the previous year.
- Section 535 of the Fair Work Act 2009 requires employers to keep employee records for 7 years in English and in a legible form.
- Proactive investigations nearly doubled to 2,860 in 2025-26, with record-keeping failures a primary trigger for FWO audits.
- Employers who cannot produce complete records face reversed onus of proof, penalties up to $93,900 per breach, and court proceedings.
- Priority sectors in 2026 include building and construction, disability support services, and large corporates with self-reporting expectations.
The Fair Work Ombudsman recovered $453 million in unpaid wages and entitlements for over 181,000 Australian workers in 2025-26, a 27% increase on the previous year. The FWO nearly doubled its proactive investigations to more than 2,860, and record-keeping failures were a primary trigger. If your employee records are incomplete or missing, you are squarely in the FWO’s sights.
This guide covers your Fair Work Act 2009 record-keeping obligations under section 535, what happens during an FWO audit, and how to prepare.
Fair Work Act 2009 Record Keeping Requirements
Section 535 of the Fair Work Act 2009 requires every employer to make and keep employee records for 7 years. Records must be in English, legible, and not false or misleading. The Fair Work Regulations 2009 prescribe the specific information required:
- Employer name and ABN
- Employee name and date of commencement
- Basis of employment (full-time, part-time, casual, fixed-term)
- Pay rate, gross and net amounts, and any deductions
- Hours worked for non-salaried employees (start, finish, break times)
- Leave taken and leave balances (annual, personal, long service)
- Superannuation contribution details (fund, amount, date)
- Any individual flexibility arrangements or guarantees of annual earnings
Records must be readily accessible to a Fair Work Inspector. If you rely on manual spreadsheets, ask whether you could produce all of the above for every employee for the last 7 years within hours. For more detail, see our payroll compliance guide for employers.
Fair Work Ombudsman Record Keeping and Pay Slips: Two Separate Obligations
Section 535 covers employee records. Section 536, combined with Fair Work Regulations r.3.46, covers payslips. Employers must issue payslips within 1 working day of payment, including employer ABN, pay period, gross and net amounts, deductions, and superannuation details. Failing to issue compliant payslips is a standalone contravention. In 2025-26, the FWO issued 53 Compliance Notices and 13 Infringement Notices to large corporate employers, many triggered by payslip non-compliance.
⚠️ Record-Keeping Failures Trigger Penalties
Under Fair Work Act s.535 and s.536, failing to keep compliant employee records or issue payslips is a civil remedy provision. Each breach can attract penalties up to $93,900 for a body corporate. Inadequate records also reverse the burden of proof in underpayment claims, meaning the employer must prove they paid correctly, not the employee prove they were underpaid.
Key Takeaways
Key Takeaways for Employers
- ✓Keep all employee records for 7 years under Fair Work Act s.535, including pay rates, hours, leave, and superannuation contributions.
- ✓Issue payslips within 1 working day of payment under Fair Work Regulations r.3.46.
- ✓If the FWO audits and your records are incomplete, the burden of proof shifts to you to show you paid correctly.
- ✓Use payroll software that auto-generates compliant records rather than relying on manual spreadsheets.
- ✓Conduct an internal record-keeping audit annually to catch gaps before the FWO does.
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What Happens When the FWO Audits Your Business
Under section 712 of the Fair Work Act, inspectors can require documents, enter premises, and compel answers. The audit process follows five stages: notice, document production, assessment, findings, and resolution. Outcomes range from voluntary back-payment to Compliance Notices, Infringement Notices, Enforceable Undertakings, or litigation.
The most dangerous scenario is incomplete or missing records. Under section 557C, the burden of proof reverses if an employer cannot produce records. The court presumes the employee’s evidence is correct unless the employer can prove otherwise. Without records, you have no defence.
As Fair Work Ombudsman Anna Booth stated in September 2026: “We know there’s a continuum of non-compliance, from inadvertent mistakes to deliberate acts, and we act proportionately to what we find.” But proportionate action still includes penalties up to $93,900 per breach for body corporates, and up to $939,000 for serious or systemic contraventions.
Fair Work Act Record Keeping Requirements: Common Gaps
Based on FWO enforcement data, the most common record-keeping failures that trigger audits are:
- Missing casual hours: Start, finish, and break times not recorded, making overtime and penalty rates unverifiable.
- Inadequate leave records: Balances not tracked, leading to termination disputes.
- Superannuation gaps: Contributions not recorded on payslips or paid late.
- Manual spreadsheet errors: Excel used for payroll without audit trails or automated award updates.
- No written contracts: Without a contract, courts rely on award default terms which may be more generous.
For practical guidance, see our HR best practice resources for employers.
$453 Million Recovered: What the 2025-26 Figures Tell Employers
The FWO’s 2025-26 recovery figures reveal where enforcement is heading:
- $217.3 million from large corporates (110,000 workers) – the FWO expects self-reporting, as Westpac did with a $50 million Enforceable Undertaking.
- $24 million from disability support services (10,546 workers) – a continuing sector-wide inquiry.
- $6.8 million from building and construction (932 workers) – 14 litigations commenced.
- $45 million from proactive investigations (13,803 workers) – up from $35.2 million the previous year.
The cumulative figure over six years is nearly $2.5 billion. The Fair Work Ombudsman is actively seeking non-compliance rather than waiting for complaints. If your industry has complex award coverage, high casual workforces, or recent legislative changes via the Fair Work Commission, your audit risk is elevated.
How to Prepare Your Business for a Record-Keeping Audit
- Audit your records: Can you produce 7 years of records for every employee? Check for gaps.
- Verify award coverage: Confirm which modern award(s) apply and that pay rates match (including the 1 July 2026 increase).
- Upgrade systems: Transition from manual spreadsheets to compliant payroll software.
- Review payslips: Ensure all r.3.46 fields are included and issued within 1 working day.
- Document everything: Maintain written contracts, variation records, and superannuation receipts.
- Conduct annual internal audits: Sample employee records yearly to catch systemic issues.
- Get professional advice: Have a compliance review done before the FWO does one for you.
Start with our free employment document templates including compliant employment agreements and record-keeping templates.
Frequently Asked Questions
The Fair Work Ombudsman (FWO) is the national workplace regulator enforcing the Fair Work Act 2009, including record-keeping under section 535. The FWO conducts proactive audits to ensure employers maintain accurate records, issue payslips, and pay correct entitlements. In 2025-26, the FWO recovered $453 million for 181,000 workers and nearly doubled proactive investigations to over 2,860. Non-compliant employers face Compliance Notices, Infringement Notices, Enforceable Undertakings, or court proceedings.
Under section 535, employers must keep employee records for 7 years in English. Records must include employer name and ABN, employee name and commencement date, basis of employment, pay rate, gross and net amounts, deductions, hours worked for non-salaried employees, leave balances, superannuation contributions, and any flexibility arrangements. Records must be legible, not false or misleading, and readily accessible to a Fair Work Inspector.
Employers must issue payslips within 1 working day of payment under Fair Work Regulations r.3.46. Payslips must include employer ABN, employee name, pay period, date of payment, gross and net amounts, deductions, and superannuation details. Failure to issue compliant payslips breaches s.536 of the Fair Work Act and triggers penalties independently of any underpayment finding.
Under s.712, FWO inspectors can require employers to produce records and answer questions. If records are incomplete or missing, the burden of proof reverses under s.557C – the court presumes underpayment occurred unless the employer proves otherwise. Inadequate records are themselves a contravention, attracting civil penalties up to $93,900 per breach for body corporates.
Employers must keep employee records for 7 years from the date the record was made or the date employment ended, whichever is later. This is set by section 535(1) of the Fair Work Act 2009. Destroying, altering, or failing to keep records within this period is a serious contravention that triggers penalties and reverses the burden of proof in underpayment claims.
Record-keeping and payslip breaches under sections 535 and 536 are civil remedy provisions. The maximum penalty per contravention for a body corporate is $93,900. For serious contraventions (deliberate or systemic), the maximum increases to $939,000 per breach. Without adequate records, the court presumes the employee’s evidence of underpayment is correct under s.557C, making compliance your primary defence.
In 2025-26, the FWO prioritised building and construction ($6.8 million recovered for 932 workers), disability support services ($24 million for 10,546 workers), and large corporates ($217.3 million for 110,000 workers). Sectors with high casual workforces, complex award coverage, and compliance histories face higher audit likelihood. Employers in these sectors should ensure record-keeping systems are audit-ready at all times.
Audit-ready employers maintain employment contracts, time and wages records (including overtime and penalty calculations), payslips, leave records, superannuation contribution records, termination records, flexibility arrangements, and deduction records. All records should be in English, kept 7 years, stored in secure accessible systems (payroll software preferred over spreadsheets), and reviewed regularly for completeness.
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