In short, a personnel file meaning is a paper or electronic folder where all HR and payroll documents from new, existing or previous employees are stored. HR files should include basic employee and compensation information in compliance with federal and state labor laws. Understanding what employment records to include in a personnel file helps you avoid costly fines and mistakes.
What should be in a personnel file?
The goal of a personnel file is to gather all important employee records and information. An HR file should include the following:
- Basic employee information such as name, contact information, social security numbers, health insurance and emergency contact details
- Job description
- Job application and CV
- Exit interview files
- Relevant tax forms
- Payroll information such as compensation, payment frequency and bank account
- Employment contracts and other relevant agreements between employees and employer
- Agreements can include non-compete agreements, the company provided car or business credit card contracts.
- Employee benefit contracts or forms and job offer letter
- Immigration documents relevant to employment
- Termination documents including the reason for leaving or firing, unemployment documents, insurance extension forms, etc.
- Optional personal file and data such as birthday, start and end of probation period
Whether the above-mentioned employee records are mandatory or not are subject to federal and state laws. Other regulations like data protection laws, such as GDPR, will also need to be considered. Because of the sensitive information stored in a personnel file, it’s important to keep employee records safe and compliant with the legal requirements.rem
The problem with paper personnel files
When looking at the list of employee records that must be stored in a personnel file, there’s no doubt that such sensitive information must be handled with care. Therefore, please note that you can’t rely on paper-based personnel files for the following reasons:
1. Personnel files should be kept safe
How to keep employee records safe? While having a dedicated employee records cabinet might look like the obvious answer, locking them in an office protects them from physical theft only partially. Forget to lock the office once and employee records could be forever exposed. One moment of distraction can make personnel files fall into the wrong hands.
What about storing it in the company’s private network? While it’s an improvement, a network is only as secure as the people who use it.
Let one employee be a victim of cyber attacks or phishing scams and the network turns into an open book. Don’t think this could happen to your business? Think again, the impact of cybercrime is estimated to cost the UK roughly up to $30bn per year, according to the National Cyber Security Centre (NCSC). The SME industry is the number one target for cyber attacks.
2. Control who accesses a personnel file
Keeping an eye on external breaches is important, but you can’t ignore the threat of internal security breaches. By sticking to paper-based personnel files or internal networks there’s little to nothing you can do to prevent unauthorized access to location or information.
With access control, unauthorized access to a personnel file will be one less thing to worry about. Access control in the HR system is usually translated as permission roles. Assigning permission roles protects the personnel file and organization in key ways. By strictly limiting who has access to the files and employee records you are also protecting your company from internal data breaches.
3. Access to a personnel file is limited
In the era of home office and remote teams, allowing employees to access data anytime, from anywhere is no longer “nice to have” but a requirement. The odds that they can access the personnel file to get their work done from their location are very limited. Personnel files can also be subject to security breaches if the remote worker is using an unsecured network to access the company database.
4. Paper personnel files are costly
Every printed employee's personnel file and employee record costs your company money. It may not seem more than a few cents of paper and ink, but it adds up. Stack up thousands or tens of thousands of pages and it becomes a meaningful number.
Add to the bill other less obvious costs. Printers themselves cost money and drive up your electricity costs. If you are still storing your documents in your office, think of the benefit that comes with freeing up office space.
With more spare space, you can have more productive use or allocate money from obsolete folder systems to more efficient tools. If not, think of the administrative and storage costs that come with each personnel file.
Last but not least, you can reduce costs with improved efficiency. The less time your employees spend looking for a personnel file and manually updating them, the more time they can spend on work that matters. By improving efficiency, you’ll maximise your resources.
5. Producing a single personnel file comes at an environmental cost
Creating and maintaining a paper personnel file comes at a high environmental cost. This translates to an endless amount of paper and electricity.
Moreover, the need for ink can also increase the amount of volatile organic compounds in the atmosphere. Even if you try to recycle, a lot of paper will still end up in the waste bin. With modern solutions like HR software, it is no longer necessary to pass the bill on to the environment.
In addition, there are myriad other risks that SME leaders fear they may face when sticking with paper-based personnel files. Specifically, 60% of SME leaders are concerned about complying with laws and regulations while another 46% are concerned about collecting and maintaining employee data.
Considering HR duties such as maintaining personnel files takes around 25% of an HR manager’s workweek. A total of 700 hours of work a year, represents lots of room for improvement. Luckily, there is a better way.
Manage personnel files with HR software
The digitalisation of HR has long benefited bigger companies. Although there are software solutions for employee file management also available for small and medium companies, many are still not enjoying the benefits of using digital employee files. Even though small businesses where personnel file maintenance is done on the side would benefit the most from modern HR software.
How? The answer is easy:
- Take off some workload by allowing employees to help you get the paperwork done and always up to date thanks to employee self-service
- Ensure the right people access the right information by assigning permission roles such as administrators or team managers
- Never search in folders again! Store all your personnel files in a single and secure HR software
- Employee records only need to be collected once and can be easily accessed regardless of how many times they need to be retrieved
- Stop worrying about data protection laws using GDPR-compliant HR software
- Improve information access across your organization with 24/7 available personnel files
- Get peace of mind with secure HR software. kiwiHR keeps employee records safe by encrypting files and locking them behind another layer of security
- Be a greener office and reduce your carbon footprint by managing employee records in an HR database
- Save time and money with digital personnel files. Moving your employee records to the cloud will enable you to allocate your resources to more productive use.