Good record keeping allows businesses to be compliant with current legislation and easily submit tax documents, manage their cash flow and monitor work-related performance. With the rise of cloud-based data management and legislation changes, businesses need to be more diligent about record keeping and be sure all documents are safe, secure and accessible upon request to the authorities.
How to manage employee records
The main reasons for employee record keeping is to:
- be up-to-date on personal information such as names, addresses, IRD number, medical information and job descriptions
- monitor employee hours and weekly earnings
- manage work-related performance
- be able to accurately calculate leftover annual leave, superannuation contributions and other entitlements
- keep track of incident reports
- ensure compliance with tax obligations
Employers are required to keep a range of information about their employees and daily business activities. This information must be stored either as physical media or digital files in accordance with the employment agreement and guidelines of the company handbook. Employers should ensure that every effort is made to reduce the risk of fire damage and theft to company records and have a secure network system in place to prevent intrusion from hackers.
As a precaution, backup copies of employee records should be made in case of property damage or accidental removal.
Types of company records
Each employee has their own personal file that contains information such as their name, address, date of birth, IRD number, basic family details, emergency contact forms and previous employers. These documents should be managed and stored in compliance with workplace privacy laws.
Other records that employers should keep include:
- records of all wage deductions, such as PAYE, student loan deductions, superannuation contributions, and any agreements for wage deductions
- requests to transfer public holidays (and whether or not these were agreed to)
- requests to cash-up annual holidays (and whether or not these were agreed to)
- dates that any extra provisions in employees'employment agreements take effect
- records of the date employees become entitled to sick and bereavement leave (to avoid disputes)
- evidence of compliance with health and safety responsibilities
- evidence of rest and meal breaks provided (or compensation for these)
- employees' bank account details if this payment method has been agreed to
- details of employees' work permits, if applicable
Record keeping legislation
As an employer, you must keep wage and time, and holidays and leave records that comply with the Employment Relations Act 2000 and the Holidays Act 2003.
To be sure that businesses are complying with their obligations such as minimum wage rates, hours of work and annual leave, employers must keep daily records of business activities and comply with the following guidelines:
- records must be kept for at least 6 years
- information must be accurate and easy to calculate hours worked, annual leave or a final payout out when employees resign
- detailed job descriptions should be kept for employees to better manage performance
- if outsourcing pay roll duties, ensure the records are detailed and accurate.
Other records such as business records need to be kept longer for tax purposes.
Record retention policy
To keep up with their record keeping obligations, businesses should adopt safe preservation methods for physical and digital copies of business records.
A record retention policy is the best way to communicate the processes and procedures to be followed when preserving records. This information is particularly important for new employers, managers or if the business is acquired by new owners.
The following information should be included in a record keeping policy:
- the type of documents to be stored – these documents may include paper documents, photographs, scanned images, digital files, blueprints, maps, technical plans, pay slips, employee records and incident reports
- how the documents will be preserved and protected from damage – in the case of digital files, describe how they will be backed up and protected from hackers or accidental deletion
- note who is in charge of record keeping and a description of what their primary duties are so that compliance to all relevant legislation is achieved
- definition of who has the authority to grant access to certain records
Who can access company records?
Employers are legally required to grant certain people access to company records. Former employees and certain union officials can request access to business records.
Employers must grant access to authorised personnel within the following timeframes:
- in relation to unions, the employer or representative must not unreasonably withhold consent for an onsite visit – if they fail to respond within two days from the date of request, consent is treated as having been obtained
- the Labour Inspector has the power and authority to enter any premises where any person is employed, to inspect the premises and request documents that they reasonably believe will assist them in determining whether compliance has been achieved
- the authority must specify a time within which the order or requirement must be completed
Employees have the right to:
- know everything you've recorded on their file
- see their records if they ask for them
Failure to keep accurate records
If employers do not keep accurate wage and time, and holiday leave records required as by the Employment Relations Act 2000 and the Holidays Act 2003, a Labour Inspector could issue an infringement notice, ordering the employer to pay money. If an employee applied to the Employment Relations Authority (ERA), they could order penalties against the employer for not keeping accurate records.
A Labour Inspector can issue an infringement notice for a breach of the record-keeping requirements (an infringemenet offence). Infringement fees are $1,000 per offence. If an employer has breached the record keeping requirements for each employee, they would get a $1,000 infringement notice for each employee. They would need to pay thousands of dollars.
The Employment Relations Authority (ERA) can order penalties of up to $10,000 per breach for an employer that is an individual. For corporate bodies, the ERA can order penalties of up to $20,000 per breach.
Employers must be prepared for inspections at any time as labour inspectors have a lot of power to issue infringement notices for breach of the record keeping requirements.
Build better businesses with Peninsula
Reduce the chances of inaccurate record keeping with Peninsula's streamlined HR and HSW software and advice. Access the latest technology in employment relations software and 24/7 expert advice from professionals. Call us on 0800215030 to find out more.
This article is for general information purposes only and does not constitute as business or legal advice and should not be relied upon as such. It does not take into consideration your specific business, industry or circumstances. You should seek legal or other professional advice regarding matters as they relate to you or your business. To the maximum extent permitted by law, Peninsula Group disclaim all liability for any errors or omissions contained in this information or any failure to update or correct this information. It is your responsibility to assess and verify the accuracy, completeness, and reliability of the information in this article.