May 30, 2024

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Retention of HR Records: What Businesses need to know

By Paul Ravey, Manager at Access Records Management

With all the recent changes to data protection and retention regulations, you could be forgiven for being confused about what data you’re required to keep and what you need to discard. These regulations serve a crucial role in keeping employee data strictly confidential, so it’s corporate responsibility to adhere to them. Beyond merely following the rules, though, bad handling of HR data can have a significant impact on staff morale, result in loss of vital records, and even incur financial penalties.

However, managing HR records doesn’t need to be an administrative burden. A robust records management strategy makes processing these documents very straightforward. Read on to find out which documents your company needs to keep, and for how long.

Tax records     

All businesses quickly accumulate a broad range of records on employee income, including income tax returns, national insurance records, and correspondence with HMRC. In line with the Income Tax (Employments) Regulations 1993, businesses must keep these records for a minimum of three years after the end of the fiscal year that they pertain to. Failure to do so can land you with a £3000 fine for noncompliance if HMRC check your records.

Records of wages and salaries

In accordance with the Taxes Management Act 1970, businesses must retain wage and salary records for at least six years from the date they’re created. This law also applies to records on overtime, bonuses, and expenses, which businesses must keep to guard against tax issues and claims of underpayment.

Health and safety records

Keeping health and safety records is also essential, although the specific laws that apply are dependent on industry and the particular practices of your business. For instance, the Control of Substances Hazardous to Health Regulations 1999 and 2002, which relates to asbestos and other dangerous materials, states that companies must keep records relating to employee exposure to these substances for up to 40 years.

Regardless of industry and legal requirements, all companies should keep accident and injury records permanently in case claims crop up.

Pension records

Companies beyond a certain size are required to provide a pension scheme, and many smaller businesses do so voluntarily. Any company that offers a pension needs a policy for retaining pension records. Typically, this means storing pension records for 12 years after the end-date of the policy.                                                         

Accident books and records

Since the Reporting of Injuries, Diseases, and Dangerous Occurrences Regulations 2013, businesses are required to keep accident books and records. Companies are legally required to retain these documents for at least three years after the final date of entry, but many choose to keep them longer. Additionally, if the accident involves a child or young adult, the records must be held until the injured person turns 21years old. In these cases, the decision on how long to keep the documents depends on the nature of the incident.

Non-statutory retention periods

There are many types of personnel records which aren’t regulated by any statutory retention requirements. Despite this, it can still serve businesses to hold on to these records to protect themselves from potential tribunal or civil claims. The length of time that companies choose to keep miscellaneous documents for comes down to the judgement of the businessowner and individuals involved. However, if you don’t know how long to retain an HR document, it’srecommend that you keep it for at least five years in Scotland, or six years elsewhere in the UK, as this covers the limit for bringing civil legal action.

Steps for effective records management

Records of taxes, wages, salaries, health and safety, pensions, accidents, and non-statutory retention periods can pile up quickly. Does your business have a strategy for filing and storing these documents, in some cases for decades? Doing so is crucial, not only for regulatory reasons but to keep your business running smoothly and your employees happy.

If you have concerns about managing your records, or just have questions, you can do what many companies already do and turn to a records management service. Dedicated, third-party providers can handle document retention on your behalf. They’re experts in the complex rules and regulations that apply to workplace documents, and they can provide additional services like digital scanning and secure destruction.