If your business has employees, then you need to meet obligatory recordkeeping rules for their files. All businesses have general recordkeeping obligations as well, which you need to manage appropriately. Some records are the same across all businesses, but you may need to keep additional files depending on the industry you operate in. This article will provide four legal tips for businesses required to keep personnel files and other records.
1. Know What Information You Need to Keep and for How Long
First, you need to know the extent of the information you need to keep. For general business purposes, you should ensure you keep documents and information detailing:
- income and expenses;
- financial reports;
- asset valuations;
- staff wages;
- company records;
- bank records;
- personnel files;
- accounting and tax records; and
- record books.
All businesses will need to keep most business records for at least seven years, including small sole traders and multilevel companies. It is good practice to keep records for at least 15 years, as this is the maximum time someone can wait to bring a legal claim against your business.
If you have employees, there are specific personnel files you need to keep to provide a clear picture of an employees work. This includes, among other things, details of:
- wages you have already paid and still owe;
- holiday and leave records;
- hours your employees have worked per pay period;
- hiring details; and
- employee information.
Recordkeeping can be a hassle, but it is much easier to deal with when something goes wrong if you already have the necessary information on hand. If there are legal issues at play, you can receive significant financial penalties for failing to keep accurate records.
2. Keep Your Files Organised and Up to Date
If your business needs to undergo an official audit as part of legal proceedings, you can receive fines for having disorganised systems that hinder an investigation. Therefore, you need to ensure you appropriately organise your records. This also means you can easily find and manage necessary information. Malicious actors can take advantage of disorganisation, allowing for more instances of theft or fraud.
You also need to ensure you keep records up to date. If an employee receives a promotion and their pay increases, update your records to reflect this. Ensure you keep an ongoing daily record of your business’ spending and income. If you do not, you risk losing important information that can lead to problems down the line.
Continue reading this article below the form3. Secure Personal and Confidential Information
Your business likely keeps both personal and confidential information, which could negatively impact your business if it got into the wrong hands. Your confidential information could include trade secrets or other intellectual property that would harm your business if a competitor had access to them. Personal information is any information that could identify a person, including:
- names;
- addresses;
- IP information;
- images; or
- financial information.
You likely hold the personal information of both your customers and your employees. You will have legal and contractual obligations if you handle information of this nature. When you deal with personal information, you need to handle it according to privacy law. If you have confidentiality agreements with business partners, you need to observe your non-disclosure obligations. Therefore, you need to ensure you adequately secure any sensitive information of this kind. Look into available cybersecurity measures, and implement appropriate physical security, such as alarms and locking systems.
4. Be Clear About Who Has Access and Who Does Not
Leading on from the previous tip, you need to know who has access to your business’ records and who does not. Not only is this important for security purposes, but it also makes any fraud investigations easier if you can clearly identify who had access to your records.
If you limit who has access to personal or confidential information, you can reduce the chances of a security breach. However, there are certain records that individuals have a legal right to see. Your employees have the right to see what information you have about them, and you need to show them their files if they ask. You can only share an employee’s records with another employee if you have a lawful business reason, such as giving wage information to the person in charge of wages. Additionally, you need to ensure you have appropriate procedures to handle requests to access personal information.
Key Takeaways
Organised and up to date record-keeping is essential for any business. However, your business can fall behind on these obligations if you are not careful. If you would like more information or help with efficiently keeping personnel files and other records, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.
Frequently Asked Questions
Most business records you need to keep for at least seven years. However, it is a good idea to keep records for at least 15 years, as this is the longest a person can wait before making a legal claim against your business in some cases.
You need to keep records of important financial/accounting information, such as income and expenses. You also need to keep employee records.
Personal information refers to any kind of data that can identify a living individual. Examples include names, email addresses, or photographs.
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