Record keeping is not just good practice; it is a legal requirement. Employers are mandated by both federal and provincial legislation to maintain records related to employee information, wages, work hours, accidents, training and other employment conditions. Failure to comply with these obligations can lead to penalties, legal disputes, and reputational damage. In short – it can be costly.
This article will explore the legal obligations surrounding record keeping in Canada, why it is crucial for businesses, and how HR professionals can ensure their organizations are on the right side of compliance.
The Legal Framework for Record Keeping in Canada
Canada’s employment laws are governed both at the federal and provincial levels, depending on the industry or sector. For federally regulated employers (e.g., banking, telecommunications, airlines, inter-provincial transportation), the Canada Labour Code sets out record-keeping obligations. For most other businesses, provincial legislation applies.
Some of the key record-keeping requirements include:
- Employment Records: Employers must keep records that detail the employee’s personal information, employment contracts, job title, and job description.
- Wages and Payroll: Records related to wages, deductions, overtime, vacation pay, and other compensation must be kept for all employees.
- Hours of Work: Time records documenting regular hours, overtime, and breaks must be maintained.
- Leave and Benefits: Records for leaves taken, such as parental leave, sick leave, or other statutory leaves, along with any related benefit payments.
- Health and Safety: Requirements vary by jurisdiction, but include training records, inspections and investigations, accident reports, committee records etc.
This is not an exhaustive list, and each province has its own rules, including about how long records must be kept. For example, in Ontario, the Employment Standards Act, 2000 requires that payroll and other employment records be kept for at least 3 years after an employee ceases to be employed (other types of record have different retention periods). Similarly, the British Columbia Employment Standards Act mandates that records be kept for 4 years.
Record keeping requirements are included in other legislation as well – not just employment standards legislation. It is important to understand the full scope of your record keeping obligations.
Finally, remember that these obligations may change. In particular, be sure to check the record keeping requirements whenever any new obligation is introduced. For example, Ontario has introduced legislation that will impose new requirements around job postings. Included in these changes is the requirement to retain certain records. Once these changes come into force, employers will need to be aware of their new record keeping requirements.
Why Accurate Record Keeping is Important
While keeping records might seem like a tedious administrative task, it serves critical purposes for both employers and employees. There are three key reasons to focus on your record keeping requirements:
1. Legal Compliance and Avoiding Penalties
The most immediate reason for proper record-keeping is to ensure compliance with legal requirements. Both provincial and federal employment standards bodies have the right to inspect employer records. Employers who fail to maintain accurate or complete records could face hefty fines, legal repercussions, or orders to compensate employees for unpaid wages or benefits.
2. Supporting Employee Claims and Disputes
Having complete and accurate records is essential when disputes arise. For example, if an employee claims they were not paid correctly, or that they worked overtime without compensation, employers must be able to provide records to support their position. Courts and tribunals tend not to look favourably on employers who cannot provide records that they are legally required to keep.
A recent decision from the British Columbia Employment Standards Tribunal highlights this issue. In Roomview Technologies Inc. (Re), a former employee claimed (among other things) that she had not been paid overtime pay. The employee worked from home, so the employer argued that it had no way to monitor the hours she worked. The employer also relied on its overtime policy which prohibited employees from working overtime. The employer, however, had not kept records of the employee’s hours of work, which it was required to do under the Employment Standards Act.
The employer’s failure to keep records of hours worked, contrary to the Act, was a critical factor in the Tribunal finding in favour of the employee. The Tribunal stated “The Employer has a statutory obligation to maintain a record of an Employee’s hours of work pursuant to section 28 of the ESA. The Employer did not meet its statutory obligation in this respect.” Without these records, the employer was unable to dispute the employee’s evidence of hours worked.
The importance of record keeping to defend against complaints or litigation goes beyond employment standards. Ensuring you have properly maintained records related to all of your legal obligations is important. These records are not only evidence, but failing to have records that you are legally required to keep can impact on your credibility.
3. Protecting Your Reputation
While this is tied to employee complaints and disputes, the importance of keeping records goes beyond just the financial risks associated with not being able to demonstrate that you have met your legal obligations. Proper record keeping demonstrates that you are an employer who understands – and meets – its legal obligations. It demonstrates your commitment to compliance and your concern for employee well-being.
Consider this example. An employee is seriously injured on the job and the nature of the injury raises a question about whether the employee was properly trained. In most jurisdictions employers are required under health and safety legislation to keep records of training. An employer who has not kept the required records will have a much greater challenge proving that the employee received the required training, and the message that this may send to other employees and stakeholders is that the employer either does not care, or is lax, with respect to its legal obligations. This impacts the employer’s reputation.
Key Takeaways for Record-Keeping
Proper record keeping boils down to three key things – knowing what you have to keep, knowing how long you need to keep it, and keeping it secure. This isn’t a “one and done” exercise though. It is important to regularly review your legal obligations (these requirements often change) and to regularly review your policies and procedures.
- Know What Records you Must Keep: Conduct a review to ensure that you understand the full scope of records that you are legally required to keep. Remember that these obligations are found in many different pieces of legislation – employment standards, health and safety, accessibility, pay equity, and more. Also remember that the requirements differ by province. If you have employees in more than one province, be sure to understand your obligations in each jurisdiction. Finally, remember to check these requirements regularly since they are subject to change.
- Retention Schedules: Understand and adhere to the retention timelines for different types of records in your jurisdiction. Remember that even within one jurisdiction, different types of records may have to be kept for different periods of time. It’s essential to have a system in place to manage record destruction after the legal retention period ends.
- Clear Policies and Procedures: Ensure that your organization has well-documented policies for record creation, maintenance, and retention. Regularly train HR staff and managers on these policies.
- Confidentiality and Security: Employee records contain sensitive information, so it is imperative to ensure that they are protected from unauthorized access, breaches, or theft. This is particularly critical in the age of digital record-keeping.
Conclusion
HR professionals are the gatekeepers of compliance when it comes to employee records. By understanding the legal obligations around record-keeping in Canada and recognizing the importance of maintaining accurate records, HR teams can protect their organizations from legal pitfalls, ensure employee rights are respected, and contribute to a more organized and efficient workplace.
Staying informed and vigilant about record keeping practices is a proactive approach to risk management and operational success. If you’re unsure whether your current processes align with legal requirements, consider conducting an internal audit to ensure compliance.
How To Simplify Record Keeping with Compliance Works?
It is time consuming and challenging to understand all of your record keeping requirements, particularly if you have employees in more than one province. What records do you have to keep? How long does each record have to be retained? How do you know when those obligations change? Compliance Works answers all of these questions with plain language summaries written by lawyers, provides you with real time updates on changes in the law, and our Checklists allow you to see all of your record keeping obligations at a glance.
Contact us to Book a Demo or email us at info@complianceworks.ca to learn how a subscription to Compliance Works can help your organization to save time and money, and reduce risk.
