Employers know that documentation is important, but what items should be kept in the Employee files? How long do you keep them? And why are they important?
In most cases, the complete employee record should be kept for a minimum 3 (three) years after the employee’s last date of employment with your organization.
There are some items from the file that must be kept longer under Canada Revenue Agency (CRA) guidelines, such as payroll, T4, RRSP and related information. These records must be retained from the start of employment until a minimum of six years from the end of the last taxation year to which the employment relates.
What to Keep?
Offer of Employment, and/or Employment contract, (3 years)
These documents show under what circumstances the employee was hired: wages and benefits offered (including vacation and sick days), compensation method, scope and hours of the work, and reporting responsibility. Both parties (worker and employer) must sign and date the offer/contract for the agreement to be valid. Written records will help eliminate the “I didn’t know that was my job!” arguments.
Resume used to obtain the position (3 years)
This is used to validate that the employee possesses the skill and education levels for the position. The employer can be held liable by third parties for the inadequate or dangerous job performance of an employee whose references were not properly screened. Providing misleading or inaccurate information on their resume, in most cases, is just cause for termination of employment.
Social Insurance Number (6 years)
It is a requirement under Canada Revenue Agency legislation that employees provide a Social Insurance Number. It is used to track the employee’s file for purposes of Income Tax, CPP, and Employment Insurance, and to verify that the employee is legally entitled to work in Canada.
If an employee presents you with a SIN that begins with the number “9”, ask the employee for verification of their employment status, as 9 indicates a temporary SIN issued to persons not normally entitled to work in Canada without a permit from Citizenship and Immigration.
CORRECT and UPDATED address, telephone and emergency (alternate) contact information. (3 years)
Should you be required to send the employee work-related mail, or provide information to Revenue Canada or other appropriate officials, it is helpful to have correct information on hand. A good example is the T4 slip. As well, in the event that an emergency or accident occurs, the employer will need to know who to contact.
Time Sheets with Vacation Pay and Time off clearly recorded (6 years)
This is to document the employee’s earnings and how they were calculated in the event that the employee disputes the amount. These records must be kept in accordance with CRA retention rules.
Ensure that overtime, vacation time and vacation pay records are clearly distinct and traceable. It is a good idea to have the employees submit a written request for vacation to help simplify this process.
Copies of all T4 slips issued (6 years)
As with the SIN, this is a requirement of Canada Revenue Agency and these records must be kept in accordance with CRA retention rules. They must include information on any RRSPs or other pension products offered to the employee.
Performance Review documents including warnings and discipline given. (3 years)
Performance Reviews are helpful in tracking employee performance and can indicate when there is a problem that needs to be addressed. If discipline is necessary due to poor performance or breach of contract, verbal and written warnings provide consistent documentation of the issues to support the employer’s decision.
Verification of changes in pay (raises, bonuses etc.) (6 years)
When granting a raise in pay, such as the result of collective bargaining, a raise in the Minimum Wage, or bonus paid as the result of good performance, you should always notify the employee in writing of the raise, so that the reason for the increase is clearly documented for both parties.
This is especially important where the employee has merit or commission levels to obtain before bonuses are paid out. The notification should clearly indicate how the bonus is calculated.
Signed proof that the Employee has received all training/instruction,
Signed and dated proof that your employee has received all necessary training and instruction, has received new policies and procedures, and responsibility as key holder if appropriate, should also be kept in the employee’s file.
This is a requirement under both Employment Standards and Health and Safety legislation. Employers are required to prove that they have provided adequate training for the workplace circumstances to all employees, and if there is no record in the file, the Ministry will presume that the training did not occur.
If an employee refuses to attend the training, they can be held responsible under Health and Safety legislation, including having their employment terminated for non-participation.
Please contact me any time with your questions regarding your Employee Files, or any other Human Resources need.