Is It Legally Required to Keep Employee Files in Hard Copy? Seeking Clarity on Document Storage

I would like your guidance on the new initiative we are proposing to initiate in our company. We are planning to maintain soft copies of documents like resumes, addresses, and other details, which can be updated in the Oracle software. I am a little bit confused and seek clarity: Is there any legal compulsion to maintain an employee's file in hard copy format? If yes, what are the things to be taken care of?

We have proposed to keep box files for copies of statutory forms like PF and ESIC, organized year-wise for all employees.

Importance of File Keeping

File keeping, according to me, is very important. Today, you have a system working in place, but what if something happens to the system? For that, you need to keep a file which would contain the following things:

- PF
- ESIC
- Declaration Form
- Employee Joining Report
- Employee Photographs
- Code of Conduct
- Address Proof
- Photo ID Proof
- Educational Documents
- Resume
- Previous Company's Appointment Letter, if any
- Appointment Letter by your company
- Confirmation Letter
- Incremental Letter

Lastly, all these should be verified by HR with their signature. Tomorrow, if anything goes wrong, you have all the proofs in hand about that particular employee. This file is confidential, and other employees are not allowed to see it.

Regards,
Varsha Ramnani

Thank you for your response. It's just an idea to maintain all these documents in soft copy format or in a big box file for all employees, rather than maintaining personal files. For example, one file for PF forms, ESIC forms, and one for letters, etc.

Please advise if there are any legal complications or if it is mandatory as per law to keep personal records.

Regards,
Ranjeet

Mandatory Physical Copies for Registration Certificates

All registration certificates must be kept in their original physical form. The rest can be maintained in soft form. The legislature has now accepted soft copy maintenance and is accordingly updating the age-old laws. However, a few acts still require the mandatory safekeeping of hard copies.

Physical Form Requirement for Labor Law Registers

Various registers required under different labor laws must be maintained in physical form. This is because inspectors inspecting the documents may not understand soft copies and will insist on maintaining hard copies.

In summary, statutory registration documents and compliance registers should be in physical form, while the rest can be in soft copy.

That will be hectic for you. Having 3-4 different files for one employee is useless. You can have partitions in one big box file itself. I think that is a better idea. Moreover, for every DOCX you have, you should have a hard copy as well as a soft copy to be on the safer side.

Legal Considerations for Employee Documentation

Ranjeet, I am not much aware of lawsuits, but as per my knowledge, you do have audits by various government and local bodies (depends on your company if they do so). For instance, if you have to fire a problem employee, careful documentation will protect you from legal danger. In the worst-case scenario, a personnel file may turn into evidence in a lawsuit brought by a disgruntled former employee. Make sure that you include all periodic evaluations, raises, commendations, and disciplinary actions in your personnel files so you always have easy access to the information you need and to protect your company in case of a lawsuit.

Thank you, Varsha and Puneet, for your responses. I appreciate them. Particularly, I am looking for the legal aspect to avoid any future complications. I would have appreciated it if senior members like Mr. Madhu TK had added their views on it. Please help me with this; suggest the pros and cons of this issue.

Regards,
Ranjeet

I think I need not give any more input on this subject because many have suggested not to drop the hard formats. I have observed that in hard formats, there are lots of advantages, particularly in the eyes of the law.

Importance of Hard Formats in Legal Context

The first document that proves the legal relationship between an employer and employee is the appointment order. It becomes a binding contract only when signed by both parties. If an employee has been given a warning or a series of warning letters for acts of misbehavior or misconduct, which will be taken as evidence before an Enquiry Officer, we should have it in hard form with the signature of the delinquent employee on it.

Similarly, we need nominations from the employee under his signature only. Therefore, we cannot dispense with paper documents in any office setup.

Thank you so much for your response. I think I am not able to express this issue properly. We are trying to drop the idea of keeping hundreds of personal files of employees. We will keep all documents along with us using the latest technology. For example, we have an option to keep a scanned copy of a resume or appointment letter duly signed by both parties in the Oracle software, which can remain with us for any number of years. We have already automated the P&I letters by sending them via email.

Document Management Proposal

What we are proposing is to keep only warning letters, certificates issued by us, PF, and ESIC forms in different box files that will be kept in one place. However, case files related to domestic inquiries will be kept separately in hard copy.

I just want to ask, is there any provision in the law to keep details of an employee in a personal file format only while we keep all the details of an employee ready with us? The idea behind this initiative is to keep information available with us at the click of a single button. Please advise.

Regards,
Ranjeet

There is no problem if you are confident that a soft form of hard copies will serve the purpose. There is no law that makes it mandatory to have all files in hard form. Even an employment contract need not necessarily be in writing! It can be verbal as well. But as far as possible, keep the scanned copies of appointment orders, increment letters, demotion letters, warnings, or show-cause memos safe.

Regards,
Madhu.T.K