How long do I keep the Organization’s Payroll Statutory Records with their types?

Retention and disposal of employment-related records are typically the primary responsibilities of an organization’s HR department. According to the Companies Act of 2013, the company is required to keep all records. The company retains data records efficiently and systematically, in a manner consistent with the GDPR requirements, ISO 9001:2015, ISO 27001: 2013, and regulatory codes of practice on records management. Following regulations and laws, all employee and company data is kept, stored, and destroyed.

In this article, we have summarized the payroll statutory record retention period and how long a business needs to keep a piece of information.

Types of payroll statutory records to be retained here:

• Payroll Records
• Pension & Retirement Records
• Tax-related Records
• Legal Files and Records
• Accounting and Finance Records
• Insurance Records
• Personnel and HR Records

#1:- Payroll Records:

• Payroll Deductions: 3 years after termination of service of employment.
• Payroll Registers (Gross and Net): 3 years after termination of service of employment.
• Employee Deduction Authorisation: 3 years after termination of service of employment.
• Details regarding gratuity and retirement disbursements: 3 years after termination of employment.
• Leave Records: 2 years after the relevant period.
• Wage Records: 3 years.

#2:- Pension & Retirement Records:

• Retirement Records → Lifetime Maintenance.

#3:- Tax-related Records:

• Payroll Tax records → 8 years
• Excise Tax records → Lifetime maintenance.
• Tax Bills, Receipts, and Statements → 8 years
• Tax Returns → Lifetime maintenance.
• Tax-Exemption Documents and related correspondence → Lifetime maintenance.
• Tax work paper packages: Originals → 8 years
• Sales Tax Records: 8 years
• Service Tax Records: 8 years

#4:- Legal Files and Records:

• Licence and Permits, Industrial entrepreneurial Memorandum, and other statutory approvals → Lifetime maintenance.
• Legal Memoranda and Opinions: 3 years after the closure of the matter.

#5:- Accounting and Finance Records:

• Accounts Payable ledgers → 8 Years
• Accounts Receivable ledgers → 8 Years
• Receivable ledgers and schedules → 8 years
• Investment Records: Permanent
• Employee Expense Reports → 8 years
• General Ledger → Permanent
• Interim Financial Statements → 8 years
• Annual Audit Reports and Financial Statements → Permanent
• Annual Audit Records: 8 years after completion of the audit
• Annual Plans and Budgets: 3 years after the budget year is closed
• Security deposit receipt copies → 3 years after termination of the contract
• Bank Statement and Cancelled Cheques → 8 years

#6:- Insurance Records:

• Group Insurance Plans: Active Employees → 8 years
• Insurance Policies for the Company’s → Lifetime
• Releases and Settlements → Lifetime

#7:- Personnel and HR Records:

• Personnel Files of individual employees’–> Lifetime
• Employee Earnings Records → 3 years after termination of service of employment
• Bonuses incentives, and awards → 8 years
• Employee Induction Records → Lifetime
• Employee Medical Records: 3 years after termination of service of employment

The important reasons behind implementing the retention of records are for the following reasons:

• Comply with legal laws & regulations
• Maintain statutory or regulatory records to avoid litigation
• To avoid penalties & fines
• To maintain documents confidential and free from Government legal actions.