Records Retention Obligations of Employer

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By Bhuvana Anand
4 minute read ● September 16, 2020
Retaining employee records

How many years of records should be preserved by an Employer under the Indian Labour and Employment Laws?

The Labour and Employment Laws in India imposes ‘Records Retention’ as a part and parcel of Statutory Compliance. It is a mandate on employer to ensure that certain registers, records and employee data are preserved for a stipulated number of years either in original or electronic form or the copies as directed by the respective laws and rules laid thereunder. This enables the supervisory authorities to scrutinize/inspect the documents; failure to preserve such records may attract penal provisions under the respective Acts.

The challenge is that our Labour Laws are colossal, and employers find it quite intricate due to the lack of a handbook or reckoner on the concept of ‘data retention period’.

greytHR is attempting to simplify the employers’ life on this per se.

As a stepping-stone we herein provide you with a gist of a few prevailing Employment Laws which mandates the ‘Records Retention period’.

  • The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“PF Act”)

The behemoth of Labour Laws, the PF Act and the rules thereunder do not explicitly provide any specific period about the data retention obligation of the employers. However, being a revenue involved by concept, there are views on various customary practices to maintain the records for the last seven to ten years. Experts also recommend not to discard any records old than seven to ten years. Having said that, the employer is in a position to evaluate the Inspection notice, obligation described therein, and context based on which can keep the required records accessible for such inspection.

The Employees’ Provident Fund Organization (“EPFO”) has published a Notification and FAQs on the Inspection Policy which can be referred by the employers for better understanding.

The ESI Act, by virtue of the Employees’ State Insurance (General) Regulations, 1950 (“ESI Regulations”), mandates that the employer must preserve the required records for a period of five years from the date of last entry therein. The ESI Regulations under Rule 32 (Register of Employees), 66 (Maintenance of Accident Book) and 102-A (Inspection Book), describes the type of records to be maintained as well as the Record Retention period as stated above.

The Wages Code is enacted under the labour reforms and has repealed the Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act and the Equal Remuneration Act. The Wages Code though mandates the employer to maintain the records, returns and notices under Section 50, is silent about the preservation period for such records.

The Ministry of Labour and Employment published a Gazette Notification dated 07 July 2020, on the Preliminary draft of the Wages (Central) Rules, 2020 under Section 67 of the Code on Wages, 2019 seeking objections and suggestions as per the stipulated timelines therein. The proposed draft rules under Chapter VIII, Forms, Registers and Wage Slip, Section 51 prescribes the maintenance of records but is silent about the preservation period.

Having said that, though the aforesaid 4 Acts are repealed by the Wages Code, the employer is left to refer the repealed Acts and the rules thereunder for the record preservation for the time being till the Wages Rules prescribes to that effect.

  • The Minimum Wages Act, 1948 (“MW Act”)

The MW Act, by virtue of the Minimum Wages Central Rules, 1950 mandates the employer to maintain the records for a period of three years after the date of last entry made therein under the Rules 26 (Form of registers and records), 26A (Preservation of registers), 26B (Production of registers and other records) and 26C (Provision for alternative forms).

  • The Payment of Wages Act, 1936 (“Wages Act”)

The Wages Act, under Section 13A, mandates that every employer shall maintain registers and records as prescribed it the Payment of Wages Rules, 1937 and all such records should be preserved for a period of three years after the date of the last entry made therein.

  • The Payment of Bonus Act, 1965 (“Bonus Act”)

The Bonus Act under Section 26 mandates the employer to maintain the prescribed records without specifying the time-frame, nevertheless, by virtue of the Payment of Bonus Rules, 1975, under Rule 4 (Maintenance of registers) and 5 (Annual returns) mandates the employer to maintain the prescribed records and the employer is obligated to file the return in Form D within 30 days after the expiry of the time limit specified in Section 19 of the Bonus Act.

The ER Act under Section 8 and by virtue of the Equal Remuneration Rules, 1976 under Rule 6 mandates the employer to maintain registers and records but do not specify as to how many years of records have to be preserved.

  • The Contract Labour (Regulation and Abolition) Act, 1970 (“Contract Labour Act”)

The Contract Labour Act, under Section 29 mandates the principal employer and contractor to maintain registers and records as prescribed and by virtue of Rule 80 (3) under Chapter VII of the Contract Labour (Regulation and Abolition) Central Rules, 1971 mandates that all such registers and other records shall be preserved in original for a period of three years from the date of last entry therein.

The BC Workers Act by virtue of Rule 241 (8), under the Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) Central Rules, 1998, mandates the employer to preserve the prescribed records in original for a period of three years from the date of last entry therein.

  • Other Legislations

The States have its respective rules framed under other enactments viz., the Factories Act, Labour Welfare Fund Act, Shops and Establishments Act, Professional Tax Act, The Maternity Benefit Act, etc., prescribing the preservation period for the records.

For example, the Karnataka Shops and Commercial Establishments Rules, 1963 under Rule 24 (8) mandates that the employer shall maintain the registers, records and notices relating to any calendar year till the end of the next calendar year. So is the case with the Tamil Nadu Shops and Establishments Rules, 1948.

Keep visiting ‘greytHR’ regularly for more updates.

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