Payroll records: what Australian employers need to keep and for how long

Published Thursday 23 July 2026

Table of contents

• What are payroll records?
• What payroll records must Australian employers keep?
• How long to keep payroll records in Australia
• Fair Work and ATO compliance requirements
• Penalties for not keeping payroll records
• Digital payroll record-keeping tips
• Simplify your payroll records with Xero
• FAQs on payroll records

Key takeaways

• Australian employers must keep payroll records for at least 7 years under the Fair Work Act 2009 (FWA), covering employee details, pay rates, hours, leave, superannuation and Pay As You Go (PAYG) withholding.
• Records must be legible, in English, readily accessible and never falsified; non-compliance can result in significant fines from the Fair Work Ombudsman and audits by the Australian Taxation Office (ATO).
• Single Touch Payroll (STP) requires employers to report payroll information to the ATO each pay cycle, making digital record-keeping essential.
• Cloud-based payroll software automates calculations, stores records securely and creates an audit trail that simplifies compliance.

What are payroll records?

Payroll records are the documents that capture every detail of how your employees are paid. They form the foundation of your compliance obligations as an Australian employer and protect both you and your team if a dispute or audit arises.

At their core, payroll records track the information you need to calculate, process and verify each employee's compensation. This typically includes:

• pay rates and hours worked
• overtime, bonuses and commissions
• leave entitlements and balances
• superannuation contributions
• PAYG withholding amounts
• tax file numbers and employment start dates
• take-home pay, plus when and how payments were made

Pay rates captured in payroll records reflect broader workforce trends. In the December quarter of 2025, wages across Australian small businesses grew by 2.0% year on year, while jobs growth reached 3.4%; based on Xero Small Business Insights data from 520,000 Australian small businesses.

Whether you store records on paper or digitally, the FWA and ATO set out exactly what you must keep and for how long. Getting this right from the start saves you time and reduces the risk of penalties down the track.

What payroll records must Australian employers keep?

The Fair Work Regulations 2009 list specific categories of information every employer must record for each employee. Here is what you need to cover.

General employee details

Start with the basics for every person on your payroll. You need to record:

• Full name and date of birth
• Employment start date
• Whether the employee is full-time, part-time or casual
• The applicable modern award, enterprise agreement or other industrial instrument
• Tax file number

Pay and earnings records

Every pay cycle, you need a clear record of what each employee earned and how it was calculated. This covers:

• Gross and net pay amounts
• Base hourly rate or annual salary
• Overtime, penalty rates, loadings and allowances
• Bonuses, commissions and incentive payments
• Deductions such as tax, salary sacrifice and union fees
• Payment date, pay period and payment method

Hours of work

Accurate time records protect you during a Fair Work audit and help resolve pay disputes quickly. Record the following for each employee:

• Start and finish times for each shift or work period
• Total hours worked each day and each week
• Any overtime hours, including whether they were authorised
• Break times taken

Leave records

Leave entitlements are a common area of dispute, so detailed records are essential. Track:

• Annual leave, personal or carer's leave, and long service leave accruals
• Leave taken and the dates it was taken
• Leave balances at any point in time
• Any leave loading payments

Superannuation contributions

You must contribute to your employees' superannuation funds at the rate set by the government (currently 12% of ordinary time earnings). Your records should show:

• The name and details of each employee's super fund
• The amount contributed each pay period
• The date each contribution was made
• Any salary sacrifice super arrangements

PAYG withholding records

PAYG withholding is the tax you deduct from employee wages and send to the ATO. Keep records of:

• The amount withheld each pay period
• The tax-free threshold claimed by each employee
• Any withholding variation notices from the ATO
• Payment summaries or income statements issued

Employment termination records

When an employee leaves, your record-keeping obligations continue. Make sure you document:

• The date and reason for termination
• Notice period given or payment in lieu of notice
• Final pay calculations, including unused leave paid out
• Any redundancy or severance payments

How long to keep payroll records in Australia

Australian employers must keep payroll records for at least 7 years under the FWA. This applies to all employee records, whether the person is still employed or has left your business.

The ATO has a separate requirement for tax-related records: you need to keep those for at least 5 years from the date you lodge the relevant tax return. Since payroll records overlap with tax records (PAYG withholding, superannuation, payment summaries), the simplest approach is to keep everything for 7 years so you meet both obligations.

The 7-year clock starts from the date the record is made or the action it relates to is carried out. For terminated employees, it starts from the last entry in the record. Storing records digitally makes it easier to manage these retention periods without filling filing cabinets.

Fair Work and ATO compliance requirements

Keeping the right records is only part of the picture. The FWA and ATO also set standards for how you maintain and present those records.

Your payroll records must be:

• In English (or easily translatable into English)
• Legible and clear
• Readily accessible for inspection by the Fair Work Ombudsman
• Not altered, falsified or misleading in any way

Under the FWA, the onus is on the employer to disprove claims in a pay dispute if proper records are not available. This means incomplete or missing records can work against you, even if you believe you paid the employee correctly.

STP adds a digital reporting layer to your obligations. Through STP, you report salaries and wages, PAYG withholding and superannuation information to the ATO each time you run your payroll. STP does not replace your record-keeping obligations, but it does mean the ATO has real-time visibility of your payroll data, making accuracy even more important.

Penalties for not keeping payroll records

Failing to keep accurate payroll records can lead to serious consequences for your business. The penalties cover both financial fines and legal exposure.

The Fair Work Ombudsman can issue infringement notices and pursue civil penalties for record-keeping breaches. Fines vary based on the severity of the contravention and are updated annually; check the Fair Work Ombudsman website for current penalty amounts. Amounts increase significantly for serious or repeated contraventions.

Falsifying records carries even steeper penalties. Courts can also order back-payment of underpaid wages, interest and compensation.

On the ATO side, inadequate records can trigger payroll audits, resulting in amended assessments, penalties for incorrect PAYG withholding and potential prosecution for tax offences. Beyond fines, poor record-keeping damages your reputation and can make it harder to attract and retain good employees.

Digital payroll record-keeping tips

Moving your payroll records to a digital system reduces manual errors and makes compliance significantly easier. Here are practical steps to get your record-keeping on track.

Choose cloud-based payroll software that automatically calculates pay, tax, superannuation and leave entitlements. Cloud storage means your records are backed up, accessible from anywhere and protected from physical damage like fire or flood.

Set up your system to generate and store pay slips automatically each pay cycle. This creates a consistent audit trail without relying on manual filing. Make sure your software integrates with STP so your ATO reporting happens seamlessly each time you process payroll.

Run regular checks to confirm employee details are up to date, including tax file numbers, super fund choices and personal information. Schedule a quarterly review to catch any discrepancies before they become larger issues.

Keep digital copies of all supporting documents alongside your payroll records, including employment contracts, variation letters, leave requests and termination correspondence. Having everything in one place saves time when you need to respond to an audit or employee query.

Simplify your payroll records with Xero

Staying on top of payroll records does not have to be a manual, time-consuming process. With the right tools, you can automate calculations, store records securely in the cloud and report to the ATO through STP, all from one platform.

Xero helps you manage payroll alongside your accounting, so employee records, pay runs, superannuation and tax reporting are connected in a single system. Xero can help you spend less time on admin and more time running your business. Get one month free.

FAQs on payroll records

Here are answers to frequently asked questions about payroll records for Australian employers.

How long do you need to keep payroll records in Australia?

You must keep payroll records for at least 7 years under the FWA. The ATO requires tax-related records for at least 5 years, so retaining everything for 7 years covers both obligations.

What happens if you don't keep payroll records?

The Fair Work Ombudsman can issue significant fines for each contravention, with amounts updated annually. You may also face ATO audits, amended tax assessments and court-ordered back-payments to employees.

What payroll records do employers need to keep?

Employers must keep records of employee details, pay rates, hours worked, leave entitlements, superannuation contributions, PAYG withholding and termination details. Records must be in English, legible and readily accessible.

Do I need payroll software for record-keeping?

Payroll software is not legally required, but it simplifies compliance significantly. It automates pay calculations, generates pay slips, tracks leave and superannuation, and handles STP reporting to the ATO.