Data protection: retention of employee records

The Data Protection Act 1998 has now been in force since 1 March 2000. While some provisions do not apply until after October this year, the arrangements for the retention of employee records both during and after employment is something that should be looked at now.

Of the eight data protection principles laid down by the Act, that which requires that personal information should not be kept for longer than is necessary, applies especially to retaining records on job applicants, employees and ex-employees.

The Information Commissioner (formerly the Data Protection Commissioner) has published a draft code of practice on "The use of Personal Data in the Employer/Employee Relationship." Consultation has ended and the final code is still awaited. The Commissioner recommends generally that the retention of records is based on a clearly established business need and not simply that they may come in useful one day.

The draft code contains guidance on retention times for records held on employees and ex-employees, which are:

Application forms – duration of employment
References received – 1 year
Payroll and tax information – 6 years
Sickness records – 3 years
Annual leave records – 2 years
Annual appraisal or assessment records – 5 years
Records relating to promotion, transfer, training or disciplinary matters – 1 year from the end of employment
References given or information needed to provide a reference – 5 years from reference/end of employment
Summary record of service (name, position, dates of employment) – 10 years from end of employment
Records relating to accidents or injury at work - 12 years

Employers therefore need to take steps now to establish required retention times (which can differ from the guidelines if there is a justified business reason for doing so); put in place a system to ensure that records are not kept beyond the standard retention times; and ensure that records no longer required are securely disposed of.
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