All employers are required to maintain employee records. It makes good business sense to organize employee data for easy access. Employers should take necessary precautions to retain and store employee information. This includes protecting employee privacy by limiting access to that information to only those people with the right and necessity to have it.
The Employment Standards Act
The Ontario Employment Standards Act requires employers to keep accurate, complete and up-to-date employee records, including:
- employee’s name and address
- employee’s date of birth if the employee is a student and under 18 years of age
- hire date
- hours worked—if employee is salaried, then the company is only required to keep records of the hours worked in excess of the regular work week (or not at all if overtime provisions do not apply)
- pay periods
- gross and net salary or wages paid, including the manner in which they were calculated
- deductions—amount and purpose
- vacation pay or paid vacation taken
- leaves of absence (all documentation and certificates)
- termination date
- termination or severance pay
Specific timelines apply to certain types of information. In general, the employer must retain this information for a period of three years after the employment relationship is terminated. Information related to the employee’s date of birth must be retained until either three years after the employee’s 18th birthday or three years after termination, whichever comes first. Separate statutes pertain to the requirements regarding corporate and accounting records. Bear in mind that the information above may not provide the full extent of an employer’s record retention obligations.
It is strongly recommended that you establish a separate file for each employee. When organizing an employee’s files, try to organize the information chronologically. The employee’s file should include:
- resumé and/or application
- signed offer letter
- tax forms (TD1 and TD1ON)
- original or copy of all benefits applications
- job description(s)
- performance plans/reviews
- performance improvement plans and/or warning letters
- all documentation and certificates with respect to illness or leaves of absence
- records of employment
- resignation letter
- termination letter/agreement
- other correspondence as appropriate
At some point in the future, you may need to justify an employment-related decision (for example, involuntary termination). A well-documented employee file may help to support that decision.
While Ontario has not yet introduced private-sector privacy legislation, it is likely that it will do so in the future. Therefore, as a start-up, ensure that safeguards are in place to protect the collection, use and disclosure of sensitive employee information. Consider the following guidelines to protect employee privacy:
- Take precautions in storing employee information.
- Make sure to disclose only the specific information that is required by government agencies and/or benefits providers.
- Do not disclose an employee’s information to anyone (other than government agencies and/or benefits providers) without first securing the employee’s permission.
Note: The information above provides a summary only. It is not intended to be an exhaustive discussion of employee records pursuant to applicable law and should not be taken as legal advice. Readers should review the full text of the Employment Standards Act and seek legal advice for more detail. If you are outside of Ontario, consult applicable employment standards legislation and seek legal advice with respect to your jurisdiction.
Your Guide to the Employment Standards Act, 2000. (n.d.). Retrieved March 3, 2009 from Ministry of Labour website, http://www.labour.gov.on.ca/english/es/guide.