Staying organized and up-to-date with employee records is a complex process that requires meticulous attention to detail. As there are so many regulations involved in the process, from privacy laws to retention requirements, it can be overwhelming.
However, maintaining accurate records is crucial for compliance and effective human resources planning. That’s why we’ve created this comprehensive checklist and guide for employers and HR leaders to make maintaining work records a breeze.
What are employee records?
Employee records, also known as employee files, contain relevant information about employees, highlighting their relationship with the company. These records are categorized into two parts, including personnel files and confidential information. Knowing where to store each type of information ensures privacy compliance and easy access for authorized personnel.
For example, the personal file contains basic information about employee documents such as employment contracts and performance reviews. It is also a great place to store employee agreements, such as non-disclosure or non-compete agreements.
In many instances, employers are legally required to keep certain employee records and information in a confidential file separate from the personnel file. The confidential file may include items such as medical records, federal and state leave documents, background checks, and documents pertaining to an employee investigation.
Why is it important to maintain accurate employee records?
Employee records management is one of the many administrative functions of a company's HR department. It involves a process of collecting, organizing, storing, and managing relevant information about employees.
One of the ways HR leaders can streamline this process is by maintaining accurate records.
Without it, inefficiencies can arise, compliance risks increase, and decision-making can be compromised due to unreliable or incomplete data, therefore jeopardizing the whole record management process.
Here are more reasons why you should ensure accuracy and consistency in work records management.
Legal compliance: Accurate record-keeping ensures companies have the required documents on hand for any audits or legal inquiries.
Employee benefits administration: Staff files contain benefit-related information such as health insurance, retirement plans, and paid time off. Maintaining up-to-date and complete records helps companies effectively administer these benefits. Additionally, accurate records help prevent legal disputes related to employee benefits.
Performance management: With accurate performance records, managers can easily track each employee's progress. A well-maintained record can also help managers identify areas for improvement and recognize outstanding performance. Lastly, organizations can make informed decisions with the right data on employee promotions, transfer, or termination.
Read next: A Guide to Mastering Performance Management
Compensation and payroll: Accurate record-keeping of compensation and payroll related documents ensures employees are paid accurately and on time. Organizations can also make informed decisions about their compensation strategy. This includes salary adjustments, bonuses, and promotions.
Employee development: With a well-maintained employee record, you can identify each employee's training needs and create personalized development plans tailored to their skills and career goals. This contributes to the improvement of overall employee performance.
Succession planning: Organizations can use employee records to identify and develop new leaders to take up key positions. These records also help to ensure a seamless transition in the event of an employee’s departure or retirement.
What are the guidelines on how long to keep documents?
Knowing how long to keep documents is crucial for several reasons.
Employment laws, tax regulations, and industry standards all have specific requirements for how long different documents must be kept.
For example, these are common retention periods for various employee documents:
- Employment records are typically retained for 3–7 years after termination.
- Payroll records are kept for at least 3 years.
- Tax records are retained for at least 4 years.
- Benefits records are retained for 6 years after the plan year ends.
- Training records should be kept for the duration of employment plus a few years after termination.
- Performance reviews are also retained for 3-5 years after termination.
Keeping these employee records for the required periods ensures legal compliance, protects the business during audits or legal disputes, and helps manage records efficiently.
Failing to do so can lead to penalties and other problems. Therefore, having a clear document retention policy is essential for any business.
Your Comprehensive Staff Files Checklist
Here we've included a comprehensive list of the right information employers and HR leaders should store in staff files:
Pre-employment
The pre-employment stage involves assessing candidates to determine if they are the right fit for the job. In this process, HR leaders are required to collect and document information about candidates during the hiring stage. These documents include:
- Job application
This is a formal document that individuals submit to express their interest in specific job positions in your company. Job application as part of an employee record is important as it helps track career growth, supports performance reviews, and ensures proper documentation for compliance. Examples of employee information collected during this stage include basic information, personal information, educational background, professional experience, skills, and qualifications. Other documents, such as a resume, cover letter, and references are also collected during the job application process.
- Offer letter
Another work record that you should store in a staff file is an offer letter and other agreements the employee would have signed during the offer process. After the interview stage, once employers decide to hire a candidate, the documents confirm the terms of employment and protect both parties by outlining job scope, salary, benefits, and other important details.
- Background check
A background check report is an important document to store in an employee's record. This report verifies the candidate's credentials and ensures their suitability for the role. Keeping this report in employee records helps maintain a complete profile, supports legal compliance, and serves as a reference for future evaluations.
Onboarding
The purpose of the onboarding stage is to help new employees transition into new roles at the company. The following documents should be collected during this period:
- Completed forms
Onboarding forms are documents that new employees are required to fill out and submit as part of the onboarding process when they start a new job. These forms help gather essential information and ensure compliance with legal and company policies. Such forms include tax forms, direct deposits, employment eligibility verification forms, personal information, etc.
- Training records
You should also keep documentation of initial and ongoing training and development sessions. It should include dates, topics covered, and completion status.
- Employee handbook acknowledgement
An employee handbook contains information on a company's policies, procedures, rules, and working and behavioral expectations. The document should be signed and acknowledged by the employee as evidence that they have received and understood the terms and conditions outlined.
Employment
This is the period during which the employee works actively for a company. Documents collected during this period include:
- Performance reviews
These evaluations are regularly conducted to document the employee’s performance, goals, achievements, and areas for improvement. Managers also use these documents to compare performance reviews from previous years with the current year's review. It comes in handy when there is a need to provide additional support and training to an employee, as well as a written warning in cases of consistent underperformance and behavioral issues.
- Payroll records
Employers keep a journal or record of all employees wages or tax payments as a way to ensure accurate payroll processing, maintain compliance with tax laws, and provide accurate documentation for financial audits. Other employee information collected in payroll records includes salary, bonuses, deductions, and any changes to compensation over time.
- Benefits documentation
Benefits are additional compensation provided to support the well-being of employees. This employee record contains information on workers' enrollment in company benefits such as health insurance, the E.V. scheme, fertility benefits, retirement plans, and other perks.
Termination
This stage concludes the employee lifecycle and includes the following key documents:
- Resignation/termination letter
This is a written document that informs the employee that their employment is terminated, or a formal letter from an employee resigning their position. The document should be signed by both parties to ensure legal compliance and contain the name, job title, reason for dismissal, and if there is a severance package offered.
- Final paycheck
This work record contains information on the final paycheck, including payment for unused vacation days, overtime pay, and other final compensations.
- Exit interview
The exit interview process gives companies an opportunity for departing employees to provide feedback about their experiences, details about their termination, and other relevant information. The insights gotten from this record can highlight areas where the company needs improvement.
Best Practices for Maintaining Employee Records
1. Store records securely
Storage is an important process for maintaining employee records.
If you're storing paper documents in a locked file cabinet with key access for limited individuals, then it is best practice to store them separately from other files. If you’re storing files electronically, the staff files must be kept in a place where they are readily accessible for inspection or examination.
You must also have a backup system in place. You don't want to have all your files on just one system because if something goes wrong, all those files could be lost. Lastly, you should find effective ways to remove staff files you no longer need. Use a shredder or secure disposal services to ensure data security. Similarly, make sure electronic files are wiped clean from the database as well.
2. Limit access to authorized personnel
To ensure confidentiality and compliance with data protection regulations, there are protocols you must follow. You have to identify a limited group of individuals who will have access to the employee records. It is not necessary for a supervisor to see everything in an employee's file. Some of the files should only be seen by HR and top management.
3. Periodically review and update employee records
Reviewing and updating employee records is an important way to ensure accuracy and compliance with current regulations. This can be done on a quarterly or semi-annual basis to reflect any changes in employment status, personal information, or job performance. Regular reviews help identify discrepancies early, allowing for timely corrections and maintaining accurate records.
4. Implement security measures
Protecting employee records is essential. For protection purposes, you can use encryption, access controls, and regular security audits. Ensure only authorized personnel can access sensitive information and store all data securely. You should also educate employees on data privacy to prevent unauthorized access. Define specific circumstances under which employees can access these files, and limit employees from correcting, altering, or removing documents in the file.
5. Consider adopting HR software
If you want a streamlined and efficient method to manage employee records, then you should consider investing in HR software.
For example, document management technology helps to automate many aspects of record-keeping, which potentially reduces errors and provides easy access to essential information. By using modern tools, you can enhance data security, improve compliance, and save time on administrative tasks.
Manage Your Employee Records with Omni
Adoption of an all-in-one HR software would be advantageous for all stakeholders in the organization, especially when it comes to employee file management. Businesses across various industries and scales are increasingly embracing automation and digitization to maximize productivity.
Powering Asia’s fastest-growing, modern companies, Omni’s document management scales alongside your company so you can customize and leverage the system to meet your evolving employee records management needs while ensuring compliance with regulations within your jurisdiction.
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