Why Record Keeping Is Important As Ever: Insights from the Federal Court’s 2025 Ruling
Background of the Case
The Federal Court has recently handed down its long-awaited decision over two regulatory actions brought by the Fair Work Ombudsman (FWO) against Woolworths Group Limited (Woolworths) and Coles Supermarket Australia Pty Ltd (Coles)[1]; and two class actions against Woolworths and Coles, concerning alleged underpayments of employees under the General Retail Industry Award 2010 (Award).
The judgment of Justice Perram involved consideration of the relationship between record keeping and the Award entitlements, stating what employers must do to effectively manage this area.
The Facts
Between 2015 and 2019, Woolworths allegedly underpaid 19,000 of its managerial employees. Similarly, between 2017 and 2020, Coles allegedly underpaid up to 8,700 employees.
The FWO pursued matters in 2021. Woolworths made remediation payments of over $300 million, and Coles of over $7 million.
The FWO was seeking compensation on behalf of individual employees who had been underpaid because it alleged that Woolworths and Coles had failed to comply with record keeping obligations. The companies argued that they had kept proper records, although they did not record every hour or every entitlement that may arise under the Award.
The Legislation
Section 535(1) of the Fair Work Act 2009 (FW Act) sets out employers’ obligations for keeping records.
Employers are required to maintain and keep records for 7 years, as prescribed by the Fair Work Regulations 2009 (Cth) (FW Regulations), for all employees.
What is the role of record keeping?
Record-keeping is important as it is necessary for:
- Legal and regulatory compliance with the FW Act.
- Employers to correctly determine additional entitlements and incentive-based payments that employees may be entitled to.
- Employers to have proof of action, and a defence against underpayment disputes.
- Employers to make informed decisions when resolving conflicts over the granting of employee benefits and entitlements.
Decision
The Court found that Woolworths and Coles are required to keep records of higher rates of payment (regulation 3.33(3)) and of overtime hours worked (regulation 3.34) even for employees who were employed on annualised salaries and that their failure to do so exposed them to the imposition of civil penalties, which the FWO wanted paid to the affected employees.
Rejecting the idea that the companies had kept records required by the FW Act and Regulations based on data from rosters and clock-in/clock-out systems, Perram J concluded that the data from rosters and clock-in/clock-out systems were inadequate as the record keeping needs to demonstrate how Award entitlements are calculated and the records kept did not assist in that task.
Specifically in relation to Woolworths Perram J found that records within its Kronos rostering systems, available in a common area. did not meet adequate record-keeping standards because they were not in a form readily accessible to FWO inspectors.
Key takeaways for employers when considering record-keeping to satisfy award entitlements
This case confirmed the following, concerning the record-keeping of employees:
- Annualised salary agreements that include set-off mechanisms cannot discharge an employer’s record-keeping obligations.
- Employers who fail to keep employment records carry the onus to disprove the FWO’s allegations of contravention.
- Even when using rosters, clock in systems, or common time-recording systems like Kronos, employers need to always check whether employees are being paid all Award-based entitlements.
It is therefore critical that employers maintain meticulous records of their employees’ entitlements, including their incentive-based payments, bonus or penalty rates, and overtime hours actually worked.
[1]Fair Work Ombudsman v Woolworths Group Limited; Fair Work Ombudsman v Coles Supermarkets Australia Pty Ltd; Baker v Woolworths Group Limited; Pabalan v Coles Supermarkets Australia Pty Ltd [2025] FCA 1092.
Written and Prepared by: Greg Doran, Caroline Mostafa & Billy Branagan
