Employee files are fundamental to effective HR management. Proper records document the employment relationship, keep track of business decisions, comply with legislation, create an audit trail and protect the company from litigation.
With an abundance of employee information and rapidly evolving technology, it is essential HR has knowledge of records retention legislation and best practices.
Yet management of employee files is not seen as a strategic priority by most HR practitioners and often fails to include strategies for managing information in diverse formats (such as emails and spreadsheets) and locations (such as cloud-based systems and locally stored digital files). Legal cases can be lost simply because of documentation that is — or isn’t — in an employee file. We define an employment file as the structured collection of retrievable records that is saved for the purpose of managing the entire employment relationship.
The impact of privacy legislation
The concept of personal employee information is defined under privacy legislation. Any record of an identifiable employee an organization collects could be interpreted as personal employee information and be subject to privacy legislation.
Where such legislation applies, employers have obligations to limit the collection, use and disclosure of personal information, and they must safeguard such information. Employees frequently have the right to access their information.
However, while employers need to be aware of the requirements under privacy legislation, they don’t necessarily need to consider every email written by an employee to be part of the file.
Human rights legislation requires employers to ensure workplaces are free from discrimination and to accommodate workers based on protected characteristics. Human rights legislation impacts the entire employment lifecycle, from hiring through to termination. Information management practices must consider human rights legislation, and records must be kept with consideration of the limitation periods within such legislation.
What records form part of file?
There are numerous types of records that are considered part of the employment file. Some are legislated while others are kept for business reasons.
Legislative requirements for employee record-keeping relate mainly to taxation and employment standards legislation and include basic employment history, wage details, tax withholdings, vacation and holiday pay and other payroll-related records. Employers are required to retain such records for a legally prescribed timeframe, typically six years. Attendance, vacation and safety records also fall under this category.
Contractual documentation entered into between an employer and employee forms the starting point of the employment file. This applies not only in terms of formal written employment agreements, but also employment offer letters and any other documentation referred to and incorporated into the employment contract, such as an employee handbook.
Termination agreements or releases are also important, as is any document signed by the employee indicating an acceptance of conditions, such as the company’s code of conduct, its bonus plan, commissions or any pay-related agreements. Non-competition, non-solicitation and non-disclosure agreements must also be retained.
Particularly important are those records that protect the employer from claims. These include performance and disciplinary documentation, company responses to accommodation requests, investigation files and company policy acknowledgements.
Because organizations are fluid and managers change and leave, recording communications and decisions is important. For instance, documenting previous reporting structures may be relevant.
What not to keep
It is tempting for employers to retain virtually all documentation in the employment file. The following information should probably not be kept:
Outdated information: Some information does not provide any purpose if it is no longer current.
Information that has outlived its purpose: For instance, if an employee receives a disciplinary letter and the letter is to be removed from the file after two years as part of a “sunset clause,” it should probably be removed (although the employer may wish to keep it to rebut a claim that the employee had a spotless record).
Information that is not required: For example, printouts of documents stored in an electronic format.
Multiple copies and versions: Generally, it makes sense to retain only the final version of a document.
This article is an excerpt from the new book published by Carswell and Canadian HR Reporter entitled HR Manager’s Guide to Employment Files and Information Management: Legislation and Best Practices, by Howard Levitt and Tanya Neitzert. Levitt is a senior partner at Levitt & Grosman in Toronto; Neitzert has held leadership roles in HR at several organizations.
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