Record keeping
Recruitment businesses must keep appropriate records to show that they comply with requirements such as the national minimum wage, Working Time Regulations, sick pay, right to work and the Conduct Regulations. In addition they have to retain records relating to commercial matters such as VAT, rent and rates.
- See also data protection
As an employment business or agency do I have a duty to keep records of work-seekers?
Employment businesses and employment agencies must retain records of their workers and candidates. Record keeping is not only for operational reasons but because records are required by various pieces of legislation, including the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (Conduct Regulations), the Working Time Regulations 1998 and the National Minimum Wage Act 1998. However, records must be kept in line with the Data Protection Act 1998 (the DPA).
Data Protection Act 1998
The DPA does not contain any specific minimum or maximum periods for retaining personal data. However, all records containing personal data must be kept in accordance with the eight data protection principles set out in the DPA. The DPA covers any information held about a person, regardless of the nature or location of the filing system used. Both physical records such as paper copies and electronic records held in emails or other computerised systems are covered. Records must be accurate, adequate and relevant, and should not contain excessive or unnecessary details. The information must be stored and processed securely. Further, the records or any part of them cannot be transferred to countries outside the Economic European Area that do not have similar laws offering protection to the individuals concerned.
What records do we need to keep under the Conduct Regulations?
When supplying or introducing workers as an employment business or agency you must keep relevant records in accordance with the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Conduct Regulations). Relevant records include CVs and registration forms. These must be kept for at least one year from the date of their creation and at least one year after the date on which you last provided services to the work-seeker or client in the course of your business as an employment agency or business. The schedules of the Conduct Regulations set out the information you must record and the following are some examples:
Work-seekers:
- Date application for work received from the work-seeker.
- Details of the work-seeker’s training, experience, qualifications, and any authorisation to undertake particular work.
- Duration or likely duration of work.
- Details of any requirements specified by the work-seeker in relation to taking up employment.
- Names of clients to whom the work-seeker is introduced or supplied.
- Date application withdrawn or contract terminated (where applicable).
Clients:
- Date application or instructions received from the client.
- Client’s name and address, location of work if different.
- Details of the position(s) the client seeks to fill.
- Duration or likely duration of work.
- Names of workers introduced or supplied to.
- Dates of requests by the agency or employment business for fees or other payments from the client and of receipt of such fees or other payments, and copies of statements or invoices.
Under the Employment Agencies Act 1973 (“EAA”), records retained by the agency or employment business should either be kept at the premises used for or in connection with the agency or employment business or they can be retained elsewhere. However, if records are retained elsewhere, the agency or employment business shall ensure that they are readily accessible and they can arrange for the records to be delivered to the location at which the work-seeker is working at. The records should arrive no later than the end of the second business day following the day a request is made for them in case of an inspection carried out under the EAA.
Unsuitability - what happens if I find out that a work seeker is unsuitable?
Conduct Regulation 20 obliges employment agencies and businesses to act if they find out a work-seeker is unsuitable for the work they are introduced or supplied to do. This obligation is slightly different for employment agencies (introducers of permanent candidates) and employment businesses (suppliers of temporary workers). The obligations are set out below:
Employment agencies - Unsuitability of candidates for permanent or fixed term work:
If, within three months from the date of introduction of a work-seeker to a client the employment agency receives or obtains information which indicates that the work-seeker is or may be unsuitable for that position the employment agency must inform the client without delay i.e. on the same day or the next business day if that is not reasonably practicable. For example, if you take up a reference or otherwise hear of information that might make the candidate unsuitable you should inform the hirer.
Employment businesses - Unsuitability of temporary workers:
If an employment business receives or obtains information during the course of an assignment that gives it reasonable grounds to believe that a worker supplied to a client is unsuitable (see above) the employment business must inform the client without delay and end the assignment.
If the information only indicates that the work-seeker may be unsuitable but is insufficient to give you reasonable grounds to believe that s/he is in fact unsuitable you should commence such enquiries as are reasonably practicable and inform the hirer of the information received and the enquiries being made. If as a result of those enquiries you have reasonable grounds to believe s/he is unsuitable you must then without delay inform the hirer and end the assignment.
Unsuitability and the Data Protection Act:
The sort of information that might indicate a worker is unsuitable will depend on the circumstances but may be a relevant criminal conviction that should have been disclosed; qualifications found to be false; or a medical condition that means the worker may either be at risk by performing the work or s/he may be placing others at risk. It should be information that would mean you would not have put the work seeker forward in the first place, and must be more than just gossip.
It is likely that ‘processing’ of data under Conduct Regulation 20 will be an exception to the Data Protection Act requirements where “it is necessary for the purposes of exercising or performing any right or obligation which is conferred or imposed by law on the data controller in connection with employment” or it is “necessary to protect the vital interests of the data subject or another person in a case where consent cannot be given…or the data controller cannot reasonably be expected to obtain the consent of the data subject” (Schedule 3 Data Protection Act 1998).
However you should be careful to check the accuracy of any information you receive as the communication of any false or misleading information prejudicial to the worker could give rise to a possible claim for damages for defamation. You should therefore ensure that if this situation does arise that you do not disclose more information to the client than is necessary. It may be sufficient where you have supplied a temporary worker to simply state that “the worker is being withdrawn pending” investigations into their suitability without stating what the allegations are.
If my business uses another agency as a second or third tier supplier do we need to keep any records?
If you use the services of other agencies or employment businesses, for example as secondary suppliers, you must also keep:
- Records of the names of work-seekers supplied or introduced by that second or third tier supplier to your clients.
- Details (including dates) of enquiries from work-seekers, clients and the second or third tier suppliers.
- Details (including dates) of the answers received in response to those enquiries to ensure their suitability and the legality of them acting as such.
- Copies of all relevant documents.
What records am I required to keep under the National Minimum Wage Act 1998
Employers, are required under the National Minimum Wage Act 1998 (“NMWA”) to keep “sufficient” records to demonstrate that they are paying their workers and employees at least the rate of national minimum wage (“NMW”). For the purposes of the NMWA “employer” includes employment businesses. For most employers their existing payroll system and business records are already suitable and no additional records may be required. However some employment businesses, for example those that deal with temporary workers who are paid piece rates based on output, will need to keep records of the data showing how they calculated the mean hourly output for the relevant piece work or tasks.
As the NMWA does not state what is “sufficient”, records can vary from employer to employer and worker to worker. The employer will have to make their own judgement as to which documents they need to keep. In a dispute over pay, the burden will be on the employer to demonstrate that they have complied with the NMWA and keeping appropriate records be vital to demonstrate this. The Department for Business, Energy and Industrial Strategy provide guidance on which records should be kept. The non-exhaustive list includes:
- Total pay by the worker and the hours worked by the worker.
- Overtime/shift premia.
- Any deduction or payment of accommodation.
- Any absences e.g. rest breaks, sick leave, holiday.
- Any travel or training during working hours and its length.
- The total number of hours in a pay reference period – this sets the averaging period to calculate whether a worker has been paid NMW e.g. workers paid monthly have a pay reference period of one calendar month.
There is no specific format how these records should be kept, however they must be kept in a single document for each pay reference period so that the information is easily accessible for the worker to see on request. The records should be kept for a period of 3 years after the end of the pay reference period following the one that the records cover. For example, if the worker is paid monthly, the record for the month of June 2008 should be kept until July 2011.
owever, although the NMWA states 3 years, it is advisable to keep records for longer period because a civil case for a breach of contract can be brought to court within 6 years (5 for Scotland) and the employer must be able to show that they have paid the minimum wage in such cases.
What records am I required to keep about a workers’ working time?
The record keeping requirements are one of the most onerous provisions of the Working Time Regulations 1998 (“WTR”).
Under the WTR workers should not work in excess of 48 hours per week unless they have signed an opt-out agreement. The REC has 48 hour week opt out agreements for both internal employees and temporary workers.
Employers (see [1] below) must keep the following records:
- a record of those who have signed a 48 hour opt-out.
- where workers have not signed an agreement opting out of the 48-hour week limit, a record of those workers’ working hours, including to show whether the 48-hour working week and the 8-hour night work limits have been complied with; and
- relating to health assessments, capacities checks and paid annual leave.
[1] An employment business supplying temporary workers will be an “employer” for the purposes of the WTR.
All working time records must be kept for 2 years. Employers must therefore ensure that their software or manual office systems can deal with the record keeping requirements. However the records relating to weekly working time will be relatively easy for employment businesses to compile because of the existing time sheet procedures. Further information about working time is available here. These and all records required under the WTR must be available for inspection on request by the enforcing authority such as the Health and Safety Executive.
Record keeping and breach of contract:
Although the above examples set out the legal requirements for how long certain records need to be kept for, there are situations where there is a justification for records to be kept for longer periods. An example would be where there is a debt or damages claim for breach of contract, as such a claim can be brought up to six years (5 in Scotland) following the breach. It is therefore advisable and justifiable to keep relevant information for this length of time after the end of any placement or termination of someone’s employment. It should be noted that just because a part of the information held is required to be held for a longer period this does not mean that the entire record should be kept – part of a record may require deleting whilst other sections are retained.
What are the record keeping requirements with regards to statutory sick pay?
Employers are required to keep records on sick pay to ensure that HMRC can see that statutory sick payments have been issued correctly:
- Records of periods of incapacity for work, i.e. days of sickness lasting at least four consecutive calendar days.
- Record of how much SSP was paid and dates payment begun;
- Any medical evidence e.g. employee’s doctor’s or hospital note;
- Records of days for which SSP was not paid, together with reasons for non-payment;
- Records of the qualifying days in each period of incapacity for work;
You can use form SSP2 record sheet or an interactive form is available within HMRC's Basic PAYE Tools package.
Use and retain a copy of form SSP1 - or your own equivalent - when your employee has had the maximum amount of SSP and needs to claim ESA.
Such records must be kept for at least three years after the end of the tax year to which they relate to. For further information on Statutory Sick Pay, please follow this link to the HMRC Employers Helpbook for Statutory Sick Pay.
What records do I have to keep with regards to statutory maternity pay?
You must keep records of the following:
- dates of continuous employment; and
- dates of maternity absence notified by employees/workers and, if different, the actual date of the first day of such absences; and
- the date the payment period began, record of payment dates and the amount of SMP paid, together with records of any weeks in the 39 week period during which SMP was not paid and the reasons for this; and
- a copy of the MATB1 certificate. If you give this back to your employee with form SMP1 keep a copy of the declaration.
If you decide that your employee or temporary worker isn't entitled to be paid SMP, you must tell them about your decision and the reason for it. This must be either:
- within seven days from the date of your decision; or
- at the latest within 28 days from the date your employee gives you notice of her intended start date or the date she gave birth if this occurred earlier.
A copy of the SMP1 will need to be completed in order for the employee/temporary worker to claim maternity allowance through JobCentrePlus. Please follow this link to the HMRC documentation section.
All records relating to statutory maternity pay must be kept for at least three years after the end of the tax year to which they relate to. For further information on Statutory Maternity Rights, please follow this link to the HMRC Employers Help book for Statutory Maternity Pay.
What records do I have to keep with regards to statutory paternity pay?
You will need to keep similar records as you do for the payment of statutory maternity pay:
- the declaration of family commitment or a copy;
- a record of the payment dates and the amounts paid;
- the date the pay period began;
- a record of any unpaid SPP with reasons.
What records do I have to keep with regards to statutory adoption pay?
You will need to keep similar records as you do for the payment of SMP/SPP. Your employee or temporary worker must give you documentary evidence to show that they're adopting a child through an adoption agency. This is usually a matching certificate or can be a letter from the adoption agency confirming that your employee or the adopter has been matched with a child.
The evidence your employee or temporary worker gives you must show:
- the name and address of the adoption agency and of your employee;
- the date the child is expected to be, or was, placed for adoption;
- the date the adopter was told by the adoption agency that they'd been matched with a child.
You must not pay SAP without this evidence. If you have any concerns about the evidence your employee gives you, you can get advice by calling HMRC's Employer Helpline - you'll find a link to their contact details at the end of this guide.
Other records that you will need to keep include:
- the evidence the adoption agency gave your employee. If you give this back to your employee with form SAP1 Non-payment of Statutory Adoption Pay (SAP) keep a copy for your records;
- a record of the payment dates and the amount paid;
- the date the pay period began;
- a record of any weeks in the 39-week period when SAP wasn’t paid, with reasons.
Non payment of SAP should be completed on HMRC's SAP1 form.
For further information on Statutory Adoption Rights see the HMRC Employers Help book for Statutory Adoption Pay.
Can we keep our records electronically?
Yes records can be kept in electronic form. However the Conduct Regulations require that all records are capable of being reproduced in a legible format. This would mean for example that the font size of the records kept must be readable by the naked eye if for example you are scanning any of the documentation. If the electronic copy is to be the only form of record kept then it must be possible to print the record legibly. All records should be kept in accordance with the data protection principles as illustrated above. It is important to note that when scanning “right to work” documentation such as a passport, the UK Border Agency guidelines state that the record must be made in a ‘non-rewritable format’, preventing changes being made to the record.
How long should we keep records for?
See the REC's record-keeping table.
Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.