Setting the [Employee] Record Straight A 3-step guide to employee records management
HR Insights

Employee records management may seem like one of the easier aspects of running a business: collect your employees’ names, addresses, and banking information, get them to sign a few forms, and then lock that dossier up for…wait, what is the legal requirement again? Five years? Seven years? Am I supposed to keep this stuff forever?

Clearly, it’s not as easy as it would seem. The Ministry of Labour recently found that poor employee record keeping is one of the most common compliance violations in Ontario.

It turns out that proper employee records management, like most HR responsibilities, requires equal parts business acumen, foresight, and bullet-proof organization. Yet when when managed properly, employee records can go beyond keeping your business compliant; they can help you make better business decisions.

When managed properly, employee records can go beyond keeping your business compliant; they can help you make better business decisions.

This is because employee records reveal important insights and trends about your workforce. And when you fully understand your people’s strengths, weaknesses, habits, and needs, you can make the best possible decisions regarding everything from salary restructuring to better benefits management.

Put simply: data makes decisions easy. And it all begins with accurate and up-to-date employee information.

So what can you do to bring your employee records management up to speed? Below are three simple steps to get the most out of your employee records strategy:

Step 1: Know exactly what you need to keep and for how long

Let’s start on the compliance side. All employers in Canada are required to store certain employee records. These include:

• employee name and residential address
• employee date of birth if under 18 (Ontario only)
• employment start date
• employee wage rate and pay periods
• hours worked by the employee on each day and each week
• written agreements to work overtime or excess hours
• amounts and reasons for deductions made to the employee’s wages
• benefits paid to the employee by the employer
• vacation pay records and annual vacation taken
• employee leave of absence records
• date of employment termination

In addition, if you deduct income tax, CPP contributions, or employment insurance, you must also keep the following employee payroll documentation:

• the hours worked by each employee
• the amounts you withheld for: CPP contributions, EI premiums and taxes
• Form TD1, Personal Tax Credits Return, which all employees have to fill out
• Form TP1015.3-V, Source Deductions Return, for any employees working in the province of Quebec
• any Canada Revenue Agency (CRA) letters of authority that let you reduce the tax deductions for certain employees for a specific year
• all information slips issued and all returns filed
• registered pension information

Legislation on each document type—and how long to keep them—differs from province to province. For example, Manitoba and Alberta require employers to retain payroll, leave, and vacation records for at least 3 years from the date each record is made. In British Columbia, however, payroll and vacation records (but not leave) must be kept for 2 years after the employment terminates.

Discarding employee records too soon or holding on to them for too long can put you at risk of liability. Wherever your business is located, ensure that you or your HR manager are up to date on the most recent employee records legislation.

Remember that keeping these records isn’t just a matter of formality. They can provide substantive evidence in case of lawsuits, payroll audits, or ministry inspections.

Additional considerations

On top of the provincially-required records, you may consider keeping additional job-related employee records. These include how the employee initially applied for the position, (i.e via job posting or a talent recruiter), their vacation policy type and usage, performance management records, and the employee’s manager or direct reports. As we’ll discuss below, when this information is kept accurate and up-to-date, it can be used for strategic business insights and decisions.

Step 2: Choose your employee records management system

How and where you store your employee records is just as important as the information itself. Needless to say, in our digital data-driven world, electronic record-keeping is an HR no-brainer. Paper-based records management is time-consuming and opens you up to risk—the risk of miscalculating vacation accruals, leaving confidential files out in the open, or even losing entire files in a workplace emergency.

Paper-based records management is time-consuming and opens you up to risk.

While spreadsheets are one solution, they are still prone to errors, require time-consuming manual data entry, and can be difficult to access and keep secure.

As the Government of Canada suggests, cloud-based employee records management can help save time and money by keeping information safe, up-to-date, searchable and even customizable:

“Using an internal website for record keeping can help you to keep track of the pay and performance of each employee as well as the dates for things like renewing training licences. Since employees only need a web browser to access their own information and add changes to it, you will also find it easier and less expensive to support employees working in remote locations.”

In addition to the points above, using modern HR software for employee records management is:

• Safe & secure: administrators can create different levels of access for authorized managers and employees.

• Easy to access from anywhere: the Ontario ESA, among others, requires that all employee records be readily available for a Ministry of Labour employment standards officer. A centralized HR platform system makes that possible.

Completely consolidated: upload, digitally sign, and store all kinds of employee documents, from employee agreements to tax forms and personal notes.

Automatically synced: By digitally syncing employee personal information with group benefits plans, employee updates are automatically sent to the benefits provider and reflected in the employee’s insurance policy within 24 hours.

Empowering for employees: through an HR and benefits platform, employees can update and access their information, including time-off accruals and group benefits coverage. Imagine the time saved for HR administrators who no longer have to chase down employees for their new addresses or answer benefits questions on a regular basis.

Finally, one of the greatest benefits of digitizing your employee records is the ability to easily export custom data sets into visual reports or CSV spreadsheets. Which brings us right to step number three…

Step 3: Turn that employee data into beautiful, insightful reports

As we mentioned above, data makes decisions easy, and it all begins with accurate and up-to-date employee information.

Tracking employment start and termination dates may be a Canadian compliance regulation, but strategically, this information can be used for much more.

We live in a data-driven world, and the workplace is no different.

For example: when tracked over time, turnover reports could reveal that employees at your company tend to resign after two years. Based on this insight, you could decide to check-in with them at their 16-month mark to find out why their engagement is dropping. Alternatively, it might be time to begin planning ahead for a new recruitment cycle.

Likewise, observing sick-day patterns may suggest when you’re likely to be short-staffed, or when is good time to promote prevention-based wellness programs in the office.

In many ways, good employee records management can help you demonstrate the core value of great HR: understanding the company inside-and-out, providing measurable analysis and reports, and knowing ahead of time which strategies will help your people thrive.

We live in a data-driven world, and the workplace is no different. Accurate employee records enable detailed and insightful reporting. Together, they empower HR and business leaders to make the best possible decisions year in and year out.

________________________________

Collage’s HR and benefits platform offers time-off tracking, employee records management, and beautiful, simplified HR reporting for Canadian small and medium businesses. Learn more about our HR solutions at www.collage.co.