Should I keep time records for salaried employees? Yes!

It’s not often we come across employers that are keeping time records for salaried employees. It’s a common misconception that you only need to keep records for waged employees. Not keeping time records for salaried employees can leave employers exposed.

The Employment Relations Act 2000 specifically provides that if an employee brings a claim to recover wages (includes salary) or other money payable the employee may call evidence to show that the employer failed to keep (or produce) a wages and time record and that it prejudiced the employee’s ability to bring an accurate claim. Unless the employer can prove that is incorrect (which is hard without said records) then the Employment Relations Authority may accept as proved all claims made by the employee in respect of wages actually paid to the employee and the hours worked by the employee.

Let’s say you have an employee that raises a claim that they’ve worked so many hours that they have not been paid at least the minimum wage for each hour of work*, how are you going to defend this claim without wage and time records? It could be almost impossible.

We’ve had a client recently in this position when the Labour Inspector came knocking. The client was investigated and ultimately an Improvement Notice has been issued. The client is required to back pay (for the past 6 years) staff (some who have now left the business and the country) that the Labour Inspector has determined have been paid less than the minimum wage. This has implications for holiday pay too, so the calculations to be done are complex. Although the client does not agree with the Labour Inspector’s position, without the client having kept wage and time records there was only so much we could do to mitigate the damage for this client. This client is now left with a difficult and costly task to complete when keeping simple time records would have mitigated (or even eliminated) the matter. This client is not alone, the vast majority of employers paying a salary do not keep time records in our experience.

Moral of the story - keep time records for all staff.

*Another common misconception is that the the Minimum Wage Act 1983 does not apply to salaried employees. Salaried employees must also be paid at least minimum wage for every hour worked.