Is your time and attendance system exposing you to underpayment claims ?

Jim Courtwood
Author of the Time & Attendance Consultant's Guides

Are you breaching the fair work act?

It may come as a surprise to many that one of the most common methods of calculating employee attendance hours may be a breach of the Fair Work Act.

I am referring to the common practice of rounding employee start times forward and docking their time accordingly if they are late.  In practical terms, it goes like this...

If an employee was supposed to clock in at 7:00 am, but they clocked in at 7:08 your entry-level attendance system may round the IN clocking to 7:15 effectively docking the employee 7 minutes.

This is a common practice because entry-level time and attendance systems are often not capable of flexible rounding rules. The rounding rule for different clocking events during the course of the day ( the in clocking, lunch clockings, end of normal time and overtime clockings) can all have different rounding rules, and this is simply way too complex for entry-level time clock systems.

It could well be that swings and roundabouts over the period of the week can even this all out, but that is not only a nightmare to monitor it is also leaving way too much to chance.  

The Fair Work Act's overarching guidelines state that an employee must be paid for all hours that they work unless there are relevant provisions in the Workplace Agreement. It is not uncommon for workplace agreements to accommodate flexible work hours, but most SME's are working under awards or fairly standard workplace agreements that do not address issues of rounding and deducting time for employees lateness in the employer's advantage.

A potential new client approached me regarding this issue a few months back. One of her employees had claimed backpay for underpayment for the last 12 months. The extent of the short pay for just 12 months for a single employee all due to rounding late clockings forward was equal to a full weeks work or about $1,200 for this single employee.

So what is best practice when dealing with this? Firstly, you should establish whether your workplace agreement defines the treatment of employee lateness. If it doesn't, then  I would suggest you limit your exposure in this regard by paying the employees for the actual number of hours they work. To achieve this, you may need to take a close look at the attendance software you use and consider changing the rules within the software or changing your software.

While it is undoubtedly the case that upgrading your attendance software will come at a cost, there will certainly be other advantages such as better leave management, reporting, data security and export options.

Jim Courtwood

Time & Attendance Consultant











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