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What do I need to do when record keeping
Record keeping is a key part of running a business — but many employers get it wrong. You need detailed personnel files for every employee — and you must keep them for at least six years.
Employers must keep specific information on file about each of their employees. Download this checklist to make sure you’re capturing all the required information in your personnel files.
Why keep personnel files?
There are a lot of details to keep track of for each of your employees. Up-to-date, accurate, detailed records will:
- underpin the good faith relationship
- help you to correctly calculate employees' pay and leave entitlements
- help with performance management, if you detail issues and performance highlights
- let you keep track of all the little details, instead of having to work it all out when an employee leaves the company or asks for leave
- help you comply with the law.
Legally, personnel files must be kept for at least six years and pay records seven years, and you have to make them available to:
- your employees, if they ask to see their own file
- their union or other representative, if requested by your employee
- Labour Inspectors and Immigration Officers from the Ministry of Business, Innovation and Employment (MBIE), if requested by them.
The records can be kept electronically or on paper (but back them up if they’re electronic), and should be in English. As an employer, you have flexibility over what form records take. But they must be in an easily accessible form and able to be printed.
Make sure you keep them secure and don't disclose an employee’s information to another employee without a good and lawful business reason, eg you can share wage information with the person who pays the wages.
New laws also mean it’s your responsibility to keep records in enough detail to comply with minimum employment entitlements. You must also have a record of the following information for each employee:
- the number of hours worked every day in a pay period
- pay for those hours.
Keeping accurate records(external link) — Employment New Zealand
Case study
What not to do
Katie runs a small internet marketing firm and employs Heather, a friend from her university years. Because Katie knows her well — and because she’s so busy getting her business off the ground — she often doesn’t take the time to update their personnel records.
After about a year, Heather asks if she’s been paid properly for holiday and sick leave. Katie realises her holiday and leave records haven’t been updated in almost nine months. Together they go back through the calendar and pay stubs, a time-consuming and frustrating process.
They can’t work out the dispute amongst themselves, so call in a Labour Inspector. Hampered by the lack of records, the inspector imposes a penalty on Katie for not keeping adequate personnel records. Katie loses not only time but money.
What you need to include
Main mandatory information
Main mandatory information includes:
- employee name, postal address and age (if under 20 years old)
- a signed employment agreement covering specific information (and any accompanying role description) and any variations
- type of employment agreement — collective or individual
- offer letter, if there is no signed employment agreement yet
- visa showing eligibility to work in NZ, if relevant
- an employee-completed Tax code declaration (IR330)
- details of agreed wage payment method, eg 'by cash' or a bank account — legally, all wages must be paid in NZ cash unless agreed otherwise in writing, eg in the employment agreement
- employment start date
- annual leave and holidays entitlement anniversary dates — the annual leave anniversary date can differ from the anniversary of the start date due to closedown periods.
Creating an employment agreement
Complete my tax code declaration(external link) — Inland Revenue
Optional information
Optional information to keep includes:
- offer letter
- emergency contact details
- contact details
- application form or CV.
Mandatory information about time worked
Mandatory information you need to keep about time worked, wages paid, and annual leave taken and owed, includes:
- the number of hours worked each day in a pay period and the pay for those hours days worked
- hours worked on those days (including public holidays)
- hours worked in different roles (only mandatory if employee performs different roles for different remuneration)
- wages paid in each pay period and method of calculation
- dates and payment for holiday, sick or bereavement leave taken
- payment (including date of payment) and portion and value of annual leave cashed-up in each entitlement year
- current entitlement to annual leave and sick leave
- dates and payment for public holidays worked and not worked, if they were paid for that day
- dates of alternative holidays taken or to be taken, and payment for any alternative holidays paid out
- day or part of a public holiday agreed to be transferred, including relevant dates (only mandatory if applicable).
Transferring a public holiday(external link) — Employment NZ
Alternative holidays(external link) — Employment NZ
Common mistakes
Record-keeping is one of the most common things that employers get wrong. Avoid these common mistakes:
- Not updating records often enough — you must record details on a daily basis.
- Not keeping employment files for long enough — you must keep details for at least six years from the date that the detail is about.
- Only starting to keep records when there's an issue, eg someone has been overpaid.
- Not having enough information to be able to accurately calculate pay for leave.
- Not having enough information in your records to work out what an employee is owed when they leave your business.
- Not having a clear description of a role to help with performance management.
- Outsourcing payroll but supplying inaccurate records or not enough detail.
