Decide how you are going to keep your personnel records, eg:

• paper/hard copy files only
• employee details held on a database
• a computerised HR/personnel administration system.

Note that computerised systems do not get rid of the need for your hard copy files altogether! You will still need to keep hard copies of original information such as application forms, references, documents requiring a signature such as contracts of employment, correspondence received about the employee etc.

Set up a personal file for each of your employees. Use the personnel file checklist to order the file and ensure that its contents are in line with the principles laid out in the Data Protection Act .

Using dividers in personnel files can make it easier to access information. You may wish to divide the file into sections, for example (starting at the back and working forwards):

• pre-recruitment information (application form, references, proof of right to work in the UK etc)
• contract and details of any benefits
• sickness and absence records
• general (eg mortgage application references)
• career/training history (including performance reviews, pay increases, promotions, disciplinary records).

A summary sheet at the front of the file, listing job titles with dates and pay summary and also a summary training record can be very useful. You may also wish to attach the next-of-kin and emergency details either to the inside front or back cover of the file so that you can always access these very quickly in the event of an emergency.

Ensure that all files are kept in a lockable drawer or cabinet and that this is securely locked when you are absent from the office.

Follow the guidance on the Data Protection Act if an employee requests access to his/her file. Decide which managers are authorised to have access to which files and ensure that confidentiality is maintained.

Update the file as required - when a piece of correspondence is sent or received, when the rate of pay changes, when an appraisal has been completed etc.

Ensure that your managers don't start to keep their own files in addition to your personal files! These would be in breach of the DPA and could lead to problems of security and lack of confidentiality.

Ensure that all employees who work with personnel files are aware of your policy on confidential information:

• that they know what should be retained
• are aware of their obligations under the Data Protection Act , ie retaining only information that is necessary for the purpose and keeping it up to date
• that they dispose of unwanted data properly and securely.

See our guide to document retention and draw up guidelines for your employees so that they and you know how long you will keep each type of document. Set up a system for regular review and pruning of the files. Invest in a robust shredder if you don't already have one!

When an employee leaves, archive the file and retain it for seven years as claims may be brought against you until this period has expired. You may wish to "prune" the file by removing inessential documents such as holiday request forms etc, but we recommend you keep, as a minimum, copies of the statement or contract, any letters confirming changes to the terms and conditions, any disciplinary records or appraisal documents for the last two years, any accident records or correspondence, sickness records and records of parental leave taken.

Personal information about your employees is strictly confidential and should be kept securely.

We recommend that you check the basic personal details of each of your employees periodically (eg annually). This will ensure that you always hold their correct address, phone number, person to contact in the event of an emergency etc. Be especially careful where confusion can arise from a change in name. Cross reference records and also note on file where an employee may use a different name outside of work.

Read also our guide and our legal overview on document retention.