Employee records are something that all businesses, whether big or small, need to keep, sometimes even years after employees have moved on. Apart from keeping up with compliance, it’s beneficial for your small business to keep employee records such as information about leave, time worked or when employment started. Keeping employee records will stop you getting into all kinds of trouble; it’s well worth the effort.
In this article, we’ll go into detail about what employee records you need to keep and how you should keep them (including how a good Human Resource Information System (HRIS) or Human Resources Management System (HRMS) like Pypa HR can help you):
Of course, this isn’t an exhaustive guide, so if you’re unsure about what records you should be keeping, check with your government websites or your legal department.
You might be wondering if you even need to keep employee records. After all, you’re a small business. Not every rule that applies to big businesses applies to you. However, there are reasons keeping records is still very important for small businesses, such as:
The exact employee records you need by law depend on your country, but here is a list of records that are necessary in all jurisdictions:
Payroll records are some of the most important employee records you need to keep because you can be fined if you make mistakes when paying your employees. Payroll records include:
You should have your employees’ tax details, including any relevant forms. You might need:
As with payroll, making mistakes with tax information can be costly, so it’s important to check the legislation in your country.
It’s also necessary to hang on to hiring records, especially employee agreements or contracts, which tell you the nature of employment, as well as how the employee should be paid. You also need to know when someone’s employment started in order to calculate leave and benefits.
In addition, you should keep other records related to hiring such as offer letters, CVs and any relevant correspondence. These documents can be used as evidence of your fair hiring practices in a wrongful termination lawsuit.
You need to keep track of how much leave your employees have used and what type it is (i.e. sick leave, annual leave, parental leave, etc.). This can help avoid any conflict over leave, and help you decide on future leave allowances. It may be especially important for parental and medical leave (records which need to be treated with the utmost confidentiality).
It’s important to keep information regarding benefits and insurance (including information about claims) so that employees know what they are entitled to. These include any records around retirement plans and benefits (including the contract in which they were stipulated), as well as records that show who is eligible for what benefits (such as seniority records).
Keeping employees’ personal information (e.g. date of birth, address etc.) and emergency information (i.e. emergency contact details) is necessary while someone is in your employment. (These records, however, may not be legally necessary and are ones that you don’t need to keep after the termination of employment). Optional personal information like CVs can be useful when making future HR decisions.
All the employee records described above (apart from personal and emergency information) have to be kept for a certain period of time prescribed by law. Exactly how long you need to keep employee records depends on your country and the relevant employment laws there. It’s best practice to consult your government’s employment and tax websites or your legal team, if you have one.
Obviously, there are different ways to keep your employee records (though you should always take advantage of modern technology to help you). Here are some tips on how to keep employee records for small businesses, with a special focus on the importance of implementing the best employee database software, the modern solution to HR record keeping:
Employee records need to be kept as often as stipulated. In the case of payroll info, that means daily. Every time you hire a new employee or grant someone leave, your records should be updated. Not keeping up to date can mean a rush to get everything sorted. HR software can make this a lot easier as information can be added automatically or by employees themselves.
A filing cabinet might be the HR go-to of yesteryear, but physical files are rather fragile and can be lost. The same can be said for a spreadsheet, which is still at risk of human error (or humans who don’t know how to use Excel). On the other hand, a reliable method of storing everything in one place is a HRIS, where you can store your files in one place without worrying about them getting lost or deleted.
Asking your employees for missing personal information is the quickest way of getting it. A good HRIS, like Pypa HR, allows employees to enter their own information, saving you time and ensuring that records are accurate.
Because of the sensitive nature of information like bank account details or medical information, security is very important when it comes to storing employee records. This means it’s better to choose a secure digital solution, instead of physical files or unprotected spreadsheets. Employee database software can also help your security concerns, making sure that information is not available to anyone it shouldn’t be, with features like two-factor authentication.
We’ve said it before, using a HRIS can make your record keeping a lot simpler and effortlessly keep you in compliance (all without hiring an HR department). No more losing files, especially with a secure cloud-based system like Pypa HR (which has the added benefit of being accessible anywhere, anytime, even on your mobile). A reliable HRIS will save you both time and money, helping you avoid any expensive mistakes. Many even come with additional features like onboarding to make them a complete HR solution.
Keeping employee records can be a bit of a headache, because you have to keep an awful lot of them and stuffing them up can be costly. However, this is 2021 and modern technology can take care of employee records for you. You can now store all of your employee information, from payroll to benefits, in one secure place: a HRIS like Pypa HR. Sign up for Pypa HR today!
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