Could you hand over your payroll records tomorrow?

Under Australian workplace law, if an employee makes a claim about their hours or pay and the employer can’t produce proper records to show otherwise, the responsibility shifts. It’s no longer on the employee to prove they were underpaid, it’s on the employer to prove they weren’t.

This isn’t new, but as Bianca Seeto, Managing Partner at Citation Legal, points out, it’s “a provision of the act that a lot of employers still don’t fully appreciate.”

Why this matters more than it used to

Before this change, the employee carried the burden of proof, and without records of their own, a lot of legitimate claims simply stalled. Lawmakers decided the party with the record-keeping obligation, the employer, should wear the consequences of not meeting it.

In practice, that means if a business can’t produce clean records, the employee’s version of events tends to be accepted. As Seeto puts it, “we don’t have the records isn’t a defense anymore… it’s the reason you lose.”

A business doesn’t need to have actually underpaid anyone to run into trouble here either. Failing to keep compliant records is treated as a breach in its own right.

None of this is designed to be alarming. As Seeto frames it, “this isn’t a law designed to catch good employers out – it’s designed to reward the ones who can show their systems are actually working.” A business with a genuinely complete, accessible audit trail is in the strongest possible position.

The test worth applying to your own business

So what does “good enough” actually look like? Seeto uses a simple, practical test with her clients:

“Could you hand these documents to a Fair Work Ombudsman inspector tomorrow and have them tell, without asking you a single follow-up question, exactly what this person was paid, for what, for what hours, at what rate, what classification, and why?”

If the answer is yes, genuinely yes, you’re in good shape. If there’s any ambiguity along the way, rounded hours, no record of why a classification was chosen, that’s where employers get exposed. Under the law, ambiguity gets read against the employer.

Sometimes you don’t want a paper trail

Physical documents are great, if you can locate them. As businesses scale, the paper trail can get hard to follow, and this can leave your business exposed.

Seeto has seen this play out with real clients. A business had hard-copy records of how certain shifts had been agreed and paid, but when it came time to produce them, they couldn’t be found.

Without those records, it looked like the affected employees had been working unpaid overtime, with an estimated liability running into the hundreds of thousands of dollars.

The business ended up hiring temporary admin support just to try to track down the paperwork, a costly exercise that a simple digital record would have avoided entirely. As Seeto puts it, “the client may not have actually underpaid an employee at all, but their records are so bad they can’t show it otherwise.”

How this tends to happen

It’s rarely one dramatic failure. More often, it’s a slow drift.

A business starts small, one site, one award, a handful of staff, and the payroll setup is built for that world. Then it grows: a second site, a third, more classifications layered in, casual staff moving between locations, and nobody recalibrates the payroll system to match the new complexity. The setup that worked for one site quietly stops being accurate for five.

Add a common, unglamorous problem: rostering and payroll not talking to each other properly. If what gets paid is based on what was rostered rather than what was actually worked, a slow, invisible gap opens up, not because anyone is dishonest, but because the systems aren’t built to catch it. Layer poor record-keeping on top, and there’s no way to catch the drift early, or defend the business if a complaint is made.

Building an audit trail that actually holds up

The fix isn’t complicated, and it doesn’t require a specialist compliance team. It comes down to a fairly consistent combination:

• Technology that captures actual hours worked at the point they’re worked
• Sound oversight of how classifications and pay rules are applied
• Regular reviews, not just at setup, but whenever the business changes

A useful place to start is a simple self-audit:

• Pick a handful of employees at random and produce their full record chain, from agreement through to classification, rosters, timesheets, and payslips, and time how long it takes
• Check their classification still matches the work they’re doing now
• Document who can approve timesheets, edit pay data, and how changes are recorded

If a problem does turn up, act on it early. Issues found and fixed by the business itself are treated very differently to ones uncovered by an investigation.

Why connected systems make this easier

Nikita Wilson, Implementation Team Lead at foundU, sees the same pattern from the systems side. A common cause of broken audit trails, she notes, is businesses relying on multiple disconnected systems, a rostering tool, paper timesheets, and a separate payroll system, where “every time that information moves between systems, there’s another opportunity for something to be missed or changed.” Manual edits made without a record of who changed what or why create the same problem later on.

The stronger the connection between rostering, time and attendance, and payroll, the easier that audit trail becomes to produce, and the less time it takes to answer a question about pay whenever it comes up.

The bottom line

The burden of proof sitting with employers isn’t a reason for alarm. It rewards exactly the kind of good habits most employers already want to have: clear records, consistent processes, and the ability to explain a pay decision without having to dig for it.

The real question isn’t whether your business has ever made a mistake. It’s whether, if asked tomorrow, you could show your work.

If you’re not sure, that’s worth a conversation, not a panic. foundU’s audit trail tools are built to keep that record chain connected from onboarding through to payslip, and Citation Legal’s team can help you get your records and processes in shape before you ever need them.