What employers need to know about employee files

Something as transactional as employment files can be of strategic importance to organizations

Brian Kreissl

By Brian Kreissl

Most HR practitioners have probably heard the familiar refrain that the main difference between modern human resources management (HRM) practices and old school personnel management is that HRM focuses on aligning an organization’s people strategy with its overall business strategy, while personnel was confined to “transactional” activities such as “hiring, firing and recordkeeping.”

Leaving aside the disciplines of talent acquisition and termination of employment, the keeping of employee records has obviously gained a bad rap over the years. Indeed, “personnel files” is one of the few phrases in which it is still considered acceptable among HR professionals to use the dreaded p-word in polite conversation.

That would tend to suggest employee files aren’t an area of strategic concern for most organizations. However, there are two problems with this approach – namely that it’s impossible for HR to become more strategic if it doesn’t get the transactional, “keeping the lights on” type activities right first, and secondly, that the keeping of detailed, accurate and up to date employment records can actually be an area of strategic importance for organizations.

Senior executives generally don’t want to hear about strategic initiatives coming out of the HR department until it is able to get the basic transactional stuff done right and satisfy the needs of internal clients. Part of that relates to the keeping of accurate, sufficient, current and confidential employee records managers and decision makers can rely on.

Supporting strategic HR programs

Accurate and current employee information can help support strategic HR programs and initiatives by providing accurate, complete and current information to support effective HR metrics and workforce analytics. This allows HR to demonstrate its value to the organization and become a trusted and valued business partner.

Without the keeping of accurate records, there would be no “big data” in organizations as it pertains to their workforces. In other words, it’s “garbage in, garbage out” when it comes to employee data because metrics are only as good as the information they are derived from.

Employment files need not be kept in old fashioned hard copy format – and indeed employee information is much more usable and can most easily be “sliced and diced” when it’s in electronic format. While hard copies of certain documents such as employment contracts, performance appraisals, disciplinary letters and release agreements should probably be kept, even many of those types of documents can be scanned, digitized or moved online and into a human resources information system (HRIS).

Keeping accurate records can also help when it comes to legal compliance – either when faced with a lawsuit from an employee or when a government inspector comes knocking. Many employment law cases are won or lost depending on the type of evidence preserved and retained by employers.

The impact of privacy legislation

Privacy legislation is important, particularly in jurisdictions where the employment relationship is covered by private sector privacy legislation. As well as preventing disclosure of private and confidential information, privacy legislation also limits the amount of information kept on file with respect to personal employee information, requires consent in many cases for collecting information, ensures that information is accurate and appropriate for the purposes in question, allows individuals to access their own information and requires that employers have appropriate safeguards in place around personal employee information.

It is also important to ensure information is kept no longer than necessary. Having an effective and legally compliant records retention policy in place can help facilitate this – as well as a properly designed and implemented HRIS.

Who should keep employee files?

In many organizations, some documents are kept by managers even where formal personnel files and the HRIS are administered by HR. While managers should keep adequate records and document information pertaining to their employees, it is probably a best practice to ensure that important documents are retained centrally as part of an employee’s file. On the other hand, it is also a best practice to ensure employee medical information is kept in separate files and that only authorized individuals have access to such information (i.e., those who administer disability and return to work programs).

But regardless of where employee records are kept or whether they are kept electronically or as simple paper files, the point is the process shouldn’t be haphazard. HR practitioners need to understand the importance of employee files and give them the respect they deserve.

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