The major compliance risk in your salaried workforce

For many Australian businesses, the logic of the salaried employee has always been comfortably simple: pay someone an agreed annual figure, and you've met your obligations. No timesheets. No clock-in records. No overtime calculations. Salary means covered.

That assumption is now legally indefensible and the consequences of holding onto it are growing.

A Compliance Landscape That Has Fundamentally Shifted

Australia's workplace compliance environment has tightened considerably over recent years, driven by high-profile underpayment cases, new wage theft legislation, and landmark court decisions that have redefined what record-keeping means for salaried staff.

In September 2025, the Federal Court handed down decisions in proceedings against two of Australia's largest employers, clarifying in stark terms what is required of businesses that pay award-covered employees an annual salary. The Court confirmed that separate records of award entitlements including penalty rates, loadings, allowances, and overtime must still be kept, even when those entitlements are 'rolled into' a salary arrangement. As one legal analysis of the decision noted, the obligation to keep records is triggered by an employee's entitlements under the applicable award, regardless of how the payment is structured.

"Employers must keep accurate and detailed employee records of all hours worked by salaried staff covered by an award, including details of any overtime or hours that would otherwise attract penalties, loadings or allowances."  — Addisons Lawyers, September 2025

For employers who have long operated without a formal time-tracking system for their salaried teams, this is not a procedural technicality. It is a structural gap that now carries significant legal and financial exposure.

What the Law Actually Requires

The Fair Work Act 2009 and Fair Work Regulations 2009 impose specific record-keeping obligations that apply to all employers, including those paying annualised wages or contractual salaries. Under these frameworks, employers are required to keep records of:

• Start and finish times for each day worked, including overtime periods
• Unpaid breaks taken by employees
• Any penalty rates, loadings, allowances, or overtime entitlements — whether paid separately or absorbed into salary
• The annual rate of pay included on each pay slip for salaried employees

Critically, the Fair Work Ombudsman also requires employers to conduct annual reconciliations comparing the salary actually paid against what the employee would have earned under the relevant award for the actual hours worked. If a shortfall exists, employers must make up the difference within the timeframe specified by the award.

Records must be retained for seven years and made available to Fair Work Inspectors on request. Simply relying on multiple data sources to piece together a record such as rostering software or building access logs has been found to be insufficient.

The Scale of the Problem

The challenge is not confined to a handful of industries. Australia has over 120 modern employment awards, and award coverage extends into sectors that have historically assumed their salaried workforce sits outside these obligations. Some of these sectors include professional services, logistics management, retail supervision, government administration, and care coordination, among others.

Australian Business Lawyers & Advisors have noted that many employers engage supervisory or middle managerial employees on annual salaries — often ranging from $65,000 to $100,000, that are intended to compensate for all hours worked. With ABS data suggesting that approximately 50% of Australia's 1.8 million clerical workers are paid above-award rates, the cohort of businesses potentially exposed is substantial.

The introduction of wage theft laws, which from 1 January 2025 made intentional underpayment a criminal offence, with civil penalties for inadvertent underpayments of up to $469,500 per breach (or $4,695,000 for serious contraventions) means the stakes of non-compliance have escalated dramatically.

Why Manual Approaches Are No Longer Fit for Purpose

Even businesses that have recognised these obligations are often attempting to meet them through a patchwork of spreadsheets, paper timesheets, and manager attestations. This approach creates three compounding risks.

First, accuracy. Manual records are inherently prone to error, omission, and inconsistency. When a Fair Work Inspector requests records, or when an employee dispute triggers a reconciliation, gaps in manual data are difficult to explain and costly to resolve.

Second, timeliness. Award reconciliations require comparison of actual hours worked against award entitlements. Without automated time data, this process is time-consuming, resource-intensive, and prone to error, particularly where employees work variable hours, across multiple sites, or on rotating rosters.

Third, legality. The Federal Court's 2025 findings made clear that simply being able to deduce hours from other data sources is insufficient. Records must be kept in a form that is readily accessible and specifies the required details clearly.

The Strategic Case for Time and Attendance Investment

Viewed through a purely compliance lens, the case for time and attendance software is already compelling. But the strategic argument goes further.

Organisations that implement robust time and attendance systems gain something beyond legal protection: they gain accurate, real-time visibility into how their workforce is actually operating. That data underpins better rostering decisions, more accurate labour cost forecasting, and earlier identification of patterns that affect productivity, wellbeing, and retention.

For HR and payroll leaders, it also fundamentally changes the nature of their role. Rather than spending hours reconciling manual records or fielding queries about pay accuracy, they can operate from a single, trusted source of truth that integrates directly with payroll and generates audit-ready reports on demand.

Organisations that have automated time and attendance tracking report significant operational gains — from the elimination of manual timesheet processing to the identification of previously invisible discrepancies in recorded hours. One Australian transport operator identified an average 5% discrepancy in recorded hours after implementation, equivalent to hundreds of lost labour hours each month.

What Good Looks Like

Effective time and attendance management for salaried employees involves more than a clocking system. The Fair Work Ombudsman recommends that employers use a intelligent system to record actual hours worked, and that employees be given the opportunity to acknowledge those records each pay cycle, a requirement embedded in many award-specific annualised salary clauses.

A robust system should therefore support:

• Accurate capture of start, finish, and break times across all sites and work modes
• Employee self-service visibility and acknowledgement of their time records
• Automated award interpretation to flag when entitlements are being approached or exceeded
• Seamless integration with payroll to ensure records translate directly into correct payments
• Reporting tools that make compliance audits straightforward, not stressful

Where OneAdvanced Fits In

At OneAdvanced, we work with Australian organisations across many sectors, including logistics, manufacturing, construction, government, care and more to implement time and attendance solutions that address exactly these challenges. Our platform is configured to each organisation's specific awards and enterprise agreements, with built-in award interpretation that responds to legislative updates in real time.

Beyond compliance, our customers use the platform to gain genuine workforce intelligence, understanding not just whether employees are being paid correctly, but how their workforce is performing, where absence is emerging as a risk, and how scheduling decisions affect both cost and experience.

The regulatory environment will not become simpler. The expectations on Australian employers around record-keeping for salaried employees are clear, and the consequences of falling short are significant. The organisations best positioned to navigate what comes next are those that have already built the systems to meet the standard, not those racing to catch up when they receive a notice from the Fair Work Ombudsman.

Want to understand how OneAdvanced Time & Attendance can help your organisation meet its compliance obligations? Contact us to speak to one of our workforce management specialists.

Sources

Fair Work Ombudsman – Annualised wages and salaries: fairwork.gov.au/pay-and-wages/minimum-wages/annualised-wages-and-salaries

Fair Work Ombudsman – Record keeping: fairwork.gov.au/pay-and-wages/paying-wages/record-keeping

Fair Work Ombudsman – Offsetting and record-keeping for salaried employees: fairwork.gov.au/newsroom/news/offsetting-and-record-keeping-salaried-employees

Addisons Lawyers – Beyond the timesheet: Federal Court ruling on set-off clauses (September 2025): addisons.com

PwC Australia – Why employers are rethinking annual salary arrangements (September 2025): pwc.com.au

Australian Business Lawyers & Advisors – Record keeping for employees on annual salaries: ablawyers.com.au

CPA Australia – INTHEBLACK: Record-keeping: The new normal for fair pay: intheblack.cpaaustralia.com.au

Sprintlaw – Annualised salary under Fair Work: What employers need to know (October 2025): sprintlaw.com.au