Billable Hours Log

What Is a Billable Hours Log?

A Billable Hours Log is a document used to track the amount of time a worker spends on specific tasks for a client. In the context of Australian business, this log serves two main purposes. It acts as the source of truth for creating accurate invoices for clients, and it functions as a formal record of work required by Australian employment and tax laws.

For consultants, lawyers, and freelancers, this log is often a digital spreadsheet or software entry. For tradies like electricians, plumbers, and builders, it takes the form of a "Job Sheet" or "Service Docket" filled out on-site. Regardless of the format, the core function remains the same. It records who did the work, when they did it, what they did, and how long it took.

Under the Tax Administration Act 1953, you must keep records that explain all transactions. A Billable Hours Log supports your invoices and proves the income you declare to the Australian Taxation Office (ATO). Without it, you risk difficulties if an audit occurs.

Furthermore, for employers, this log is often the primary evidence used to satisfy the record-keeping obligations set out in the Fair Work Act 2009. It proves you have paid employees correctly for the hours they have worked.

When to Use This Document

You should use a Billable Hours Log whenever you charge for your time or labour. This applies to a wide range of industries and situations across Australia.

Service-Based Businesses If you run a consultancy, accounting firm, or legal practice, you bill based on time. You must use this log to capture every minute spent on a client file. In these professions, time is often billed in six-minute increments. Using a log ensures no billable time is lost and creates a clear audit trail for the client.

Trades and Construction Traditionally, tradespeople use a Job Sheet Template or carbon copy docket. You should use this when visiting a client’s site to perform repairs or installations. The log should be filled out in real-time on-site. It allows you to record materials used and hours worked, which the client signs to approve before you leave.

Managing Staff If you employ staff under Modern Awards, you must use a log to track their hours. The Fair Work Regulations 2009 require you to keep records for at least seven years. Awards like the Building and Construction General On-site Award 2020 often require a daily record of start and finish times. Using a log helps you meet these strict requirements and manage penalty rates accurately.

Fixed-Price Projects Even when working on a fixed-price contract, you should use an internal log. While the client pays a set fee, you need to track your internal burn rate to ensure the project is profitable. If the scope of work changes, the log provides the evidence needed to claim a "Variation" to the contract.

Key Sections and Required Elements

To be legally compliant and practically useful, a Billable Hours Log must contain specific information. A vague record can cause problems with the Fair Work Ombudsman or the ATO.

Worker Identification and Classification

You must clearly identify who performed the work. This section should include the worker’s full name and their job classification. For employees, this classification must match the definition in the relevant Modern Award, such as "Level 1 Clerical" or "Apprentice Electrician".

If you are engaging a contractor, you must record their ABN. It is vital to distinguish between an employee and a contractor to avoid "sham contracting" penalties under the Fair Work Act. Misclassifying an employee as a contractor to avoid award obligations can lead to fines of up to $93,900 for corporations.

Time Recording Details

This is the core of the document. You must record the date, start time, finish time, and the duration of any unpaid breaks. The Fair Work Ombudsman recommends recording hours at the time they are worked rather than guessing at the end of the fortnight.

Your log should also state your rounding policy. Many professional services in Australia use six-minute billing units (one-tenth of an hour). Tradespeople might use a minimum call-out fee or charge in 20-minute blocks. You must disclose this rounding method to the client. Under the Australian Consumer Law, failing to disclose how you calculate time could be seen as misleading or deceptive conduct regarding the price.

Scope of Work and Client Details

You need to link the time to a specific task and client. Record the client’s name and the site location. The description of the work must be detailed. Instead of writing "labour" or "meeting", write "Installed 3-phase power board in main switchboard" or "Initial strategy meeting regarding Q3 marketing."

If you are a tradie, this section should also list materials used. This helps substantiate the invoice and allows you to track the cost of goods sold.

Authorization and Sign-Off

The final element is a space for authorization. For employees, this might be a weekly sign-off acknowledging the hours recorded are correct. For external clients, especially in the trades, a signature on the spot confirms the work was done and the time spent is accepted. This signed docket serves as strong evidence in a contract dispute.

How to Write a Billable Hours Log (Step by Step)

Creating a log that works for your business and complies with Australian standards involves a clear process.

Step 1: Select the Right Format

Choose a format that suits your workflow. Digital tools that integrate with accounting software like Xero or MYOB are excellent for offices. They allow for automatic syncing with Single Touch Payroll (STP). For on-site work, a physical Service Docket Template or a tablet app is often best. The key is that the system must be usable in real-time.

Step 2: Define the Billing Increments

Decide how you will charge for time. Legal and consulting firms typically use six-minute blocks. If a task takes 12 minutes, you bill for two units. Trades might set a minimum charge, such as one hour, then bill in 15-minute increments thereafter. Write this policy clearly on the document so the client understands how the final cost is calculated.

Step 3: Record Time Daily

Make it a rule to record time as it happens. Do not wait until Friday afternoon. Reconstructing a week of work from memory is rarely accurate and often disadvantages the employee or leads to overcharging. For businesses covered by the Work Health and Safety Act, accurate recording is essential to manage fatigue risks, particularly in high-risk industries like mining and construction.

Step 4: Separate Billable and Non-Billable Hours

Best practice involves tracking "Non-Billable" hours separately. Activities like administration, training, and vehicle maintenance should be logged but marked as internal or non-billable. This separation allows you to calculate your "effective hourly rate." It shows you how much time you spend on revenue-generating tasks versus overheads. This is a key metric for assessing the profitability of your business.

Step 5: Describe the Work Specifically

When filling out the "Scope of Work" section, be precise. "Fixing plumbing" is too vague. "Replaced flexible hose under kitchen sink" is better. If a dispute arises later, a detailed description helps prove that the work was necessary and within the agreed scope.

Step 6: Secure Client Approval

If you are on a client site, ask them to sign the log before you leave. If you are remote, send the log with your invoice. Ensure the client knows they can query the hours within a set timeframe, such as seven days. This prompt confirmation reduces the likelihood of unpaid invoices later.

Step 7: Store Records Securely

You must keep these records for a minimum of five years for tax purposes, though the Fair Work Act requires employment records to be kept for seven years. If you store these digitally, you must ensure the data is secure. The Australian Signals Directorate recommends the "Essential Eight" strategies to protect business data. Encrypt your logs to protect client personal information under the Privacy Act 1988.

Common Mistakes to Avoid

Rounding Excessively Rounding up every short task to a full hour is a common error. While you can have minimum charges, routinely inflating time can be considered misleading under the Australian Consumer Law. Ensure your rounding policy is consistent and disclosed.

Failing to Track Breaks Forgetting to record unpaid breaks can lead to confusion over total hours worked. Under various Modern Awards, employees are entitled to specific breaks. If your log shows a 9 AM start and 5 PM finish without a break recorded, it implies a 8-hour continuous shift. This can cause issues with wage calculations and fatigue management compliance.

Mixing Personal Time Do not mix personal errands with billable client time. If a builder stops for personal grocery shopping on the way to a supplier, that time should not be billed to the client. Keeping a clean record maintains trust and ensures you do not overcharge.

Ignoring State Variations Do not assume a one-size-fits-all approach works across Australia. Western Australia uses the Work Health and Safety Act 2020 (WA), which has specific codes for fatigue management in mining. Victoria and Western Australia use OHS Acts rather than the model WHS laws. Your log must capture the data required by the specific state regulations where the work is performed.

Losing the Records Digital records can be lost if not backed up. Physical books can be damaged or left in a ute. Losing a Billable Hours Log means losing your ability to defend against a claim of non-payment. It also leaves you vulnerable if the Fair Work Ombudsman asks for proof of hours worked. In disputes, courts have ruled that an employer’s failure to keep a compliant log can lead to an assumption that the employee’s claim of hours is correct.

Legal Considerations (AU)

When creating and using a Billable Hours Log in Australia, you must navigate several legal frameworks.

Fair Work and Record Keeping The Fair Work Act 2009 (Cth) mandates that employers keep accurate records of hours worked. These records must be readily accessible to a Fair Work Inspector. They must include the employee’s name, hours worked (start and finish times), and pay rates. A Billable Hours Log often serves as the source data for these mandatory records. Failure to keep proper records can result in penalties.

If you use the log to determine pay, ensure it meets the specific requirements of any applicable Enterprise Agreement or Modern Award. Some awards require the employee to sign or acknowledge the record weekly.

Sham Contracting Be very careful with how you label workers in your log. If you refer to an employee as a "subcontractor" in the document to avoid paying superannuation or award rates, you risk sham contracting provisions under the Fair Work Act. The document itself should not contain clauses that attempt to misclassify the worker. The content of the log should reflect the reality of the working relationship.

Work Health and Safety (WHS) In high-risk industries, hours logs are critical for safety. Under WHS laws, you have a duty of care to manage the risks of fatigue. If a worker is injured on the job, or if a fatigue-related accident occurs, the hours log will be examined as evidence of whether the worker was overworked. This is particularly relevant in industries like transport and construction.

Tax and GST The ATO requires records to be kept for five years to explain all transactions. Your Billable Hours Log provides the link between the activity performed and the income declared. If you are registered for GST, the log helps verify that the tax charged on the invoice relates to a taxable supply made in Australia.

Privacy If your logs contain personal information about clients or employees, you must handle it in accordance with the Privacy Act 1988 (Cth). This includes taking steps to protect the data from unauthorised access. If you use a digital platform or share the data with a payroll agency, you may need to provide a Privacy Collection Notice.

Frequently Asked Questions (preview)

Do I need a physical signature on a Billable Hours Log? While not always legally required, a physical or digital signature is highly recommended. It provides evidence that the client or employee agrees with the recorded hours. For tradies using a Service Docket, a signature is standard industry practice to avoid "he said, she said" disputes.

How long should I keep these logs? You should keep Billable Hours Logs for at least seven years if they are used to calculate employee wages or are related to long-term contracts. For general tax purposes, the ATO requires five years. Keeping them for seven years ensures you cover both bases.

Can I charge for travel time? Yes, you can charge for travel time, but you must disclose this to the client. It should be recorded as a separate line item in the log with a clear description, such as "Travel from depot to client site." The terms of charging for travel should be agreed upon in your initial contract or service agreement.

What is the difference between a Billable Hours Log and a Timesheet? The terms are often used interchangeably, but there is a slight difference. A timesheet is usually an internal document used for payroll and calculating wages. A Billable Hours Log is focused on what is charged to the client. In many small businesses, the same document serves both purposes, but you must ensure the hours recorded match the pay records to avoid underpayment claims.