An Employment Law Perspective

1

Document Retention for Irish Businesses

• An Employment Law Perspective
• Sorcha Finnegan

2
Introduction

• Myriad of legislation impacting on obligations of
  companies and businesses e.g. Companies Acts,
  Financial auditing requirements
• Directors Compliance Statement is an Obligation
  on Company Directors to report annually to
  shareholders on the companys compliance with
  company law, tax law and on other enactments that
  materially affect the companys financial
  statements. Report by Company Law Review Group
  to be furnished to the Minister for Trade
  Commerce by 31 July 2005.
• Employment law only one aspect of compliance
• Where to start? - Classification of documents
• Legal requirements v recommended requirements
• Personal Information under the Data Protection
  Acts
• Potential Litigation - relevance of documents
  in legal proceedings Discovery

3
Personal Information under the Data Protection
Acts 1988 to 2003

• No express retention period in relation to
  employee records
• Duty not to retain personal information for
  longer than is necessary
• Duty on Data Controller (e.g.employer) to set
  appropriate retention periods in relation to
  employee records
• Consider statutory retention periods and any
  professional guidelines applicable
• Decisions taken on a case by case basis

4
Legal Requirement -v- Recommended Requirement

• Statute imposes restrictions on the retention
  period of documents
• Litigation there are recommended requirements
  to keep certain documents in the event of
  potential litigation. Consequences of litigation
  would be breach of contract, personal injury etc.
• Discovery duty to retain all potentially
  relevant documents meaning of relevance to
  proceedings

5
Classification Documents

• Payroll and Financial Information
• Employee Leave
• Work Time Records
• Data Protection
• Litigation
• Other Issues

6
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
1. All payroll and other financial information including - Revenue related communication and correspondence, PAYE and other relevant tax forms, P60s, P45s, P90s, P110s, financial records including receipts, invoices and corrections, expense claims, records relating to any benefits in kind provided to employees. (i) Section 886 of the Taxes Consolidation Act, 1997 (the 1997 Act) provides for the obligation to keep certain records. The definition of records includes accounts, books of account, documents and any other data maintained manually or by any electronic, photographic, or other process. These Records should be kept for a period of 6 years. 6 years 6 years
(ii) The National Minimum Wage Act, 2000 provides that an employer is obliged to keep at the premises or place where the employee works, such records as to illustrate that the National Minimum Wage is being complied with. In Ireland the National Minimum Wage is EUR7.65 per hour from 1 May 2005. 3 years 3 years
7
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(iii) The terms of Employment (Information) Act, 1994 requires a written statement of an employees terms and conditions of work to be furnished to them within 2 months of the commencement of employment. 1 year 1 year
8
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(iv) Income Tax (Employers) 2003 Regulations were introduced for a range of employee benefits in May 2004. Where an employer provides a taxable benefit to an employee the employer is obliged to operate PAYE/PRSI on the taxable value of the benefit. Employers are required to retain a record of benefits provided to employees as well as the computation of the amount of each taxable benefit. 6 years 6 years
9
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(v) For the tax year 2004 and subsequent years, the gross pay on the end of year return Form P35 for each employee should include any taxable benefits received by the employee during the year. Employees Forms P60 and P45 should reflect the total of ordinary salary plus the amount of any taxable benefit paid during the year and the PAYE/PRSI in respect of the aggregate. N/a 6 years
(vi) The Payment of Wages Act 1991 governs the payment of wages from employer to employee. It provides for modes of payment of wages and regulates deductions from pay. An employee who makes a complaint to a Rights Commissioner that an unlawful deduction has been made may make the complaint within six months of the unlawful deduction. This can be extended up to a further six months in exceptional circumstances. 1 year 1 year
10
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
2. Information relating to employee leave, whether paid or unpaid (e.g. maternity leave, parental leave, etc). (i) Parental Leave Act 1998 (1998 Act) entitles employee with one years continuous service, to take up to fourteen weeks unpaid leave, to take care of their child up to the age of five. The 1998 Act, requires employers to make a record of the parental leave and force majeure taken by the employees, showing the period of employment of each employee and the dates and times that each employee was on parental leave or force majeure leave. 8 years 8 years
11
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(ii) Under the Carers Leave Act 2001 (the 2001 Act) employees who have been employed with one years continuous service, may be entitled up to 65 weeks leave to take care of a person who requires full time care and attention. 8 years 8 years
12
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(iii) The Maternity Protection Act, 1994 provides for a right to paid maternity leave of not less than 18 weeks plus a further eight weeks unpaid leave. 1 year 1 year
13
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(iv) The Adoptive Leave Act, 1995 provides that the adoptive mother is entitled to avail of adoptive leave from employment, except in the case where the male is the sole adopter. The leave entitlement is for 14 weeks after the adoption takes place, with an option for a further eight weeks if the employee chooses. 1 year 1 year
14
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
3. Working Time Records The Organisation of Working Time Act, 1997 (the "1997 Act") states that employers are obliged to keep certain employee records relating to time worked, i.e. annual leave, maximum working time and rest periods. Under Section 25(1) of the 1997 Act, these records must be kept in the work place for at least 3 years. 3 years 3 years
3.1 Personnel files information concerning working hours etc. The records which are required to be kept under Section 25(1) are set out in the Organisation of Working Time (Records) (Prescribed Form and Exemptions) Regulations, 2001. The Regulations require an employer to keep a record of - 3 years 3 years
15
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(a)(i)(ii)                          The name and address of each employee, their PPS number and a brief statement of his or her duties as an employee (which can be a reference to a job description or classification). Copy of the employee's Contract of Employment, or the written statement of their terms and conditions of employment pursuant to the Terms of Employment (Information) Act details of the days and total hours worked in each week by each employeeleave taken by the employee by way of annual leave and public holiday and payment received in respect of that leave
16
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
(iii)(b) any additional days pay paid to an employee in respect of a public holiday entitlements.Copies of any notice in which an employee is informed of his starting and finishing times, (however, this may already be provided in the employees Contract of Employment.)Certain classes of employers are exempt from the obligation to keep records of rest breaks etc. under Section 25(2) of the 1997 Act. These include employers who have electronic record keeping facilities (such as flexi clock or clock in facilities). An employer who fails to keep records set out above shall be liable to a fine not exceeding EUR1,900.
17
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
4. Personal Information under the Data Protection Acts Data Protection Acts 1988 and 2003 do not expressly provide for a retention period in relation to employee records. However, an employer is under a duty not to retain personal information about an employee for longer than is necessary for the purposes for which the personal information about the employee was obtained. Therefore, it falls primarily on the employer as data controller to set an appropriate retention period in relation to employment records. This retention period should take into account any statutory retention periods (e.g. records for tax and employment law purposes) and any professional guidelines applicable. Case by case basis
18
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
The employer as data controller is best suited in setting the retention period due to its insight into the operational and legal requirements of the sector involved. An employer may need to retain employee records if there is a possibility of an action being taken against the employer, i.e. an unfair dismissal or breach of contract claim. It may also be necessary for employers to retain records for the purposes of providing a reference in relation to an employee. Therefore, retention periods should be set on a case by case basis and take into consideration the type of personal information involved and the fact that not all personal information in relation to an employee needs to be retained for the same amount of time.
19
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
5.5.1 Potential litigation Statute of LimitationsPersonal injury action (i) An employer may have a reasonable belief that the former employee is going to sue the company for an injury sustained in the workplace. The statute of limitations for a personal injury action is now 2 years from the date on which the cause of action accrued or the date the plaintiff first had knowledge of the injury. In the latter case this could mean the company is left open to possible litigation for an indefinite period. 2 years
5.2 Action in contract (ii) The statutory limitation period for a breach of contract action is six years from the date on which the cause of action accrued. 6 years
20
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
5.3 Action concerning instrument under seal (save for arrears of rent, rent charge, mortgage arrears of annuity charged on personal property) (iii) An action may be taken within 12 years concerning an instrument under seal (e.g. power of attorney).         12 years
5.4 Negligence Action (iv) The relevant statutory limitation period for an action in tort such as negligence is six years from the date of the alleged breach of duty. 6 years
5.5 Personal Injury action from negligence, nuisance or breach of duty (v) The statutory limitation period for tort litigation, which involves an element of personal injury, is 2 years from when the cause of action arose or when the individual became aware of the injury. 2 years from the date the cause of action accrued or the date of knowledge (whichever is the later) of person injured.
21
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
5.6 Unfair Dismissal Action (vi) An employee who has one years continuous service may, after termination of employment, pursue a claim to the Employment Appeals Tribunal for unfair dismissal under the Unfair Dismissals Acts 1977 to 2001. An employee has six months from the date of termination in which to submit a claim, however this can be extended to 12 months in exceptional circumstances. 1 year 1 year
5.7 Equality Action (vii) An employee may (irrespective of his length of service) pursue a claim for discrimination under the Employment Equality Act 1998 (on the grounds of family or marital status, gender, stability, race, religion, age, sexual orientation or membership of a travelling community) either during or after termination of his employment. Again, the employee has six months from the date of the alleged discrimination in which to submit a claim to the Director of Equality Investigations or if it involves a dismissal a complaint may be made to the Labour Court. This can be extended to 12 months in exceptional circumstances. 1 year
22
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
5.8 Action under the Organisation of Working Time Act, 1997 (viii) An employee or any trade union of which the employee is a member may make a complaint to a Rights Commissioner that a relevant section of the 1997 Act has been contravened (for example, required to work excessive hours). The complaint must be presented within six months of the alleged contravention and may be extended to 12 months in certain circumstances. 1 year
6. All information and documentation concerning the transfer of employees pursuant to the EC (Safeguarding of Employees Rights on Transfer of Undertakings) Regulations 2003 (the 2003 Regulations) The 2003 Regulations apply to any transfer of an undertaking business or part of a business from one employer to another employer as a result of a legal transfer (including the assignment or forfeiture of a lease or merger). 1 year
23
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
7. All information and documentation concerning redundancy within the organisation. The Redundancy Payments Acts, 1967 to 2003 (the Acts) provide that complaints under the Acts may be made to the Employment Appeals Tribunal (e.g. not a genuine redundancy situation) within six months of the alleged contravention. This can be extended to 12 months in exceptional circumstances. 1 year
8. References received Under the Data Protection Acts 1988 and 2003 an employee would have a right of access to any written references about the employee received by a new employer and not given in confidence. Therefore references received should be retained for a period of time in order to comply with this obligation. N/a 6 years
24
Data Classification Explanation Legal Requirement Recommended Retention Period post employment
9. Records in relation to Health Safety in the Workplace The Safety, Health Welfare at Work Act, 1989 provides for the management of health and safety in a workplace. Section 60 of the Safety, Health Welfare at Work (General Application) Regulations 1993 provides that records of any accident or dangerous occurrence which is required to be reported to the Health Safety Authority, must keep such records for a period of 10 years from the date of the accident or dangerous occurrence. 10 years 10 years
10. Records in relation to electronic contracts in the workplace The Electronic Commerce Act, 2000 defines an electronic contract as a contract concluded wholly or partly by means of electronic communication. The Act does not in any way affect the rules of contract law to be applied to the formation or validity of electronic contracts. Therefore the ordinary rules of contract law will apply. As an electronic contract has the same legal status as a written contract, it is recommended that the electronic contract be retained for a period of six years in the event a breach of contract action arises (See Section 5.2 above). 6 years 6 years
25
Data Protection and Internet Usage

• Electonic Commerce Act 2000 confirms that
  electronic documents, including e-mail have the
  same validity in law as written documents.
  Certain e-mail communiciations may fall under
  various statutory, regulatory or business
  practice requirements for document retention.
• A Companys e-mail retention policy should be in
  writing.
• It is important to have policies and procedures
  in place regarding internet usage in the
  workplace to prevent unlawful misuse of the
  internet.
• A Contract of Employment/Employment Handbook
  should refer to the employers entitlement to
  monitor the employees computer for internet
  usage during the course of their employment.

26
Summary

• Necessity for well drafted document retention
  policy
• Potential exposure to Litigation
• Legal Requirements v Recommended periods of
  retention best practice
• Be Prepared!

27
Contact Details
Sorcha Finnegan Solicitor Landwell
Solicitors Gardner House Wilton Place Dublin
2 Ph 01 662 6276 E-Mail sorcha.finnegan_at_ie.lan
dwellglobal.com