Employee records: what to keep, and for how long
Small employers tend to keep everything forever in a shared folder. Both halves of that are a problem.
Employment generates paper: contracts, payroll data, right-to-work documents, absence records, appraisals, correspondence. In a small company it accumulates wherever it lands — a drive folder, an inbox, a filing cabinet, three of those simultaneously.
There are two obligations pulling in opposite directions. Some records must be retained for defined periods, and some must not be retained beyond the period for which there is a reason to hold them. Keeping everything indefinitely fails the second obligation while feeling like compliance with the first.
Sort by why you hold it
Retention rules attach to purpose rather than to document type, so the sort that matters is by reason.
- Statutory — records you are required to keep for a period set by law: payroll and tax, working time, right to work, certain health and safety records. The period is defined and non-negotiable.
- Contractual — the contract itself, variations, and anything establishing terms. Kept for the employment and a defined period after, because disputes can arise later.
- Operational — appraisals, training records, absence. Held while relevant to managing the employment, and reviewed rather than kept by default.
- Transient — recruitment material for unsuccessful candidates, expired certifications, superseded drafts. Deleted on schedule.
The categories above are general; the actual periods differ substantially between countries and sometimes between sectors. Write your schedule against the rules that apply to you and review it when the rules change.
Write the schedule down
A retention schedule is a one-page table: category, what it covers, how long, what happens at the end, who is responsible. It is the document that turns a vague intention into something that can be executed by someone who was not there when it was decided.
Without it, deletion never happens, because no individual is willing to be the person who deleted something that later turned out to be needed. The schedule moves that decision from an individual judgement to a policy.
Separate the sensitive material
Certain categories carry higher obligations almost everywhere: health and medical information, trade union membership, anything about criminal records, biometric data, and in many jurisdictions data on ethnicity, religion or sexual orientation collected for monitoring.
These should be held separately from the general personnel file, with access restricted to the people who genuinely need them. Sickness certificates in the same folder as the contract, visible to anyone with drive access, is the standard small-company failure and it is a meaningful exposure.
Control access deliberately
Shared drives accumulate permissions. A folder created by a founder gets shared with an office manager, then with a bookkeeper for one task, then inherited by whoever replaced them, and nobody ever removes anyone.
Audit access twice a year. The question is not who has been given access but who currently needs it, and the answer for personnel records is usually two or three people in a company of twenty.
Employees can ask to see it
In most jurisdictions with modern data protection law, an employee has a right to request the personal data you hold about them, and to have inaccurate data corrected. For a product-level comparison in this area, review employee PC activity tracking. For broader independent guidance on this point, consult DOL recordkeeping guidance.
The practical implication is that personnel records should be written as though the subject will read them, because they may. Notes recorded in a personnel file should be factual, dated and defensible. The informal manager's note about someone's attitude is the item that causes difficulty, and it is also the item with the least operational value.
Plan for the exit
When someone leaves, records do not all end. Payroll and tax records continue for their statutory period. The contract is retained against the possibility of a claim. Operational material largely does not need to be kept.
Add a records step to the leaver checklist: what is retained, what is deleted, when the remainder becomes due for deletion. Otherwise a leaver's full file sits in the drive indefinitely, which is the outcome the retention schedule existed to prevent.