What is a personnel file?
A personnel file is a paper or electronic folder where all HR and payroll documents from new, existing or previous employees are stored. Personnel files should include basic employee and compensation information in compliance with federal and state labour laws. Understanding what employment records to include in a personnel file helps you avoid costly fines and mistakes.
What to include in a personnel file:
The goal of a personnel file is to gather all important employee records and information. A personnel file should include the following:
- Basic employee information such as name, contact information, health insurance and emergency contact details
- Relevant tax forms
- Payroll information such as compensation, payment frequency and bank account
- Employment contracts and other relevant agreements between employee and employer.
- Agreements can include non-compete agreement, company-provided car or business credit card contracts.
- Employee benefit contracts or forms
- Immigration documents relevant to employment
- Termination documents including the reason for leaving or firing, unemployment documents, insurance continuation forms, etc.
- Optional personal data such as birthday
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 law.
The problem with paper personnel files
When looking at the list of employee records that must be kept stored in a personnel file, there’s no doubt that such sensitive information must be handled with care. Therefore, you can’t rely on paper-based personnel file 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 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 scam 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). In fact, 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 file or internal network there’s little to nothing you can do to prevent unauthorised access to location or information. With access control, unauthorised access to a personnel file will be one less thing to worry about. Access control in HR software is usually translated as permission roles. Assigning permission roles protects the personnel file and organisation in key ways. By strictly limiting who can access personnel file 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 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 for more productive use or allocating money for 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 really 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 concern about complying with laws and regulations while another 46% concerns about collecting and maintaining employee data.
Considering HR duties such as maintaining personnel files takes around 25% of an HR manager’s workweek, meaning 700 hours of work a year, there’s lots of room for improvement. Luckily, there's a better way.
Manage personnel files with HR software.
The digitalisation of HR has long benefited bigger companies. Although there are software solutions for personnel file management also available for small and medium companies, many are still not enjoying the benefits of a digital personnel 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 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 your all personnel files in a single and secure HR system.
- 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 organisation 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 foot-print by managing employee records in a digital system.
- 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.
Ready to take your personnel files in the digital form?
It is not only more efficient, but it is also socially responsible. Plus, you will save more time and maximise resources when you streamline all your employee files in a single secure system. Start your free trial today and enjoy the many benefits of maintaining personnel files digitally.