The management of payroll is not a simple task. It does not matter whether the count of the workforce can be counted with only your hands or a strong 50; there’s a lot of documents that have to be maintained and stored regarding the information of employees. Failure to implement proper payroll management can result in massive fines and penalties. In order to help you, we have put together a quick guide for managing employee payroll records.
Also Read: Payroll Deductions in UAE: What are Mandatory and Voluntary Deductions?
Which Payroll Records Businesses Should Keep
Payroll records are items and documents that are related to the salaries of employees. Just like how the job interview records and applications of candidates are to be kept by employers in UAE, it is also best for employees to maintain all payroll-related documents for a certain amount of time. The following are the records that you should keep in your storage files:
Hiring Documents
Hiring documents, most importantly offer letters, include essential employee data: pay rate, job title, residential address, and complete name as shown in passport. Hiring documents have to be kept for at least three years.
In addition, documents related to the eligibility of employees working in the UAE are to be kept for at least three years.
Timecards
Time cards show the total hours that have been put in by each employee every pay period, including overtime pay and lunch breaks (paid or unpaid). Keep the records for a maximum of three years (can be physical or digital).
Paystubs
Paystubs show the payment dates, as well as the total salaries of employees per pay period. A paystub includes crucial information such as additions e.g. reimbursements, and deductions e.g. benefits and taxes to wages. Keep the records for four years.
Employee Handbook
Every employee has to have an employee handbook that has been signed. Employee handbooks provide crucial information as to how employees are to conduct their tasks and how they are paid (salary or hourly). The handbooks for employees also show how often employees are to be paid (biweekly, weekly or monthly). Lastly, handbooks are to decide information such as termination, severance, and holidays. These documents should be kept for a three-year period.
Compensation Philosophy
The compensation philosophy of a business provides a clear picture on the pay grade of employees, as well as how to determine each employee’s pay grade. The philosophy also contains a rationale for all merit increases or pay increases. They are to be kept for two years.
Leave Documentation
UAE businesses have to keep payroll records regarding leave policies, leave balances, leave payments, and leave requests made by employees. The information can be found on employee paystubs and handbooks of employees. Keep the records for three full years.
Information on Termination
Terminations letters outline the end date of employees, as well as final payments made to them. They may be severance or unused paid leave or time off. Information regarding termination should also be kept for at least three years.
Take note that any time a dispute occurs or a claim is filed by an employee or any staff member, it is best practice for a business in the region to keep payroll records even until a claim or dispute has already been resolved (either amicably or not).
Destroying the Payroll Records of Employees
Keep in mind holding or storing payroll records that are longer than what’s necessary may put a business at risk. You may ask why. It is because personal and financial information that are related to payroll, including credit cards, photocopies of IDs, and bank account information among others, have to be destroyed following the retention time in order for confidential data to remain hidden. The destruction of payroll records after a certain time frame can also help avoid sensitive data from falling into the wrong hands. In case there are questions regarding the destruction of documents, a business should also keep track as to when the records relevant to employee payroll were destroyed.
You may also read: How can payroll services provider save you time and money?
Storage of Employee Records on Payroll
There are lots of records relevant to payroll businesses are to manage. A business owner has to have good filing systems in place in order for the tracking of every document. You should always think twice when you store paper records within boxes or filing cabinets. More often than not, the records are placed at the back of our heads, completely forgotten about. This increases the risk of keeping them for longer than what Is necessary or recommended.
Additionally, it can also be time-consuming for you to manually file every single document. What is more tiresome is referring back to a certain record that is filed in the cabinet. What is best is for employers to let payroll processing experts do the task of managing employee records together with payroll processing for the business. If you wish to talk to our payroll processing team regarding your concerns on payroll management, don’t hesitate to give us a call today.
