Digitizing Employee Files: What Are the Legal Risks of Shredding Originals?

Dear Friends, we would like to digitize our employees' personal files.

Requesting your guidance on the following points:

1. Are there any legal implications in the future if we shred the physical employees' personal files?
2. Please suggest the best tool for document storage.

We would appreciate your input on the above two points.

Regards, Appalaraju

Document Retention Requirements

You are not required to maintain documents beyond the maximum required by law. Labour Law requires you to keep the records for 3 years (in most cases). The Companies Act requires you to keep records for 8 years if it pertains to financial data.

For employees who are no longer working with you, the period of limitation is 3 years for any claims. Therefore, you cannot be asked to show any documents beyond that.

Digital Records and Document Destruction

You can choose a particular cut-off date keeping the above in mind and destroy the old documents. In this case, since you have digital records, your possible issues are far less. Under the Information Technology Act 2000, digital copies have the same value as the original records in most cases.

It is suggested that due to various laws (labour, financial, and other) applicable to an organization and the scope of inspection (period in years) by various authorities, you should maintain the record for at least 8-10 years from the date of the last entry.

If there is any legal case ongoing for a former employee, do not destroy the file until all legal options have been exhausted.