Legislative Framework for Record Retention Requirements
As most HR professionals know, document retention for employee-related records—such as personnel files, payroll information, benefits records, and background checks—is a particularly complicated process, required by law, with variations from country to country. Complicating the process further, each document in each country has its own individual retention requirements, and the financial penalties for noncompliance can be significant. A carefully designed and implemented HR record retention policy is a necessary step to support an employer’s robust compliance program.
While disposing of too many records can increase a company's legal exposure, disposing of too few records may also increase legal exposure as well as the cost of storage. Employers must identify which records should be retained, how long documents should be retained and the different formats in which records may be stored. Employers must also determine how to ensure internal HR record retention policies comply with all applicable regulations and local laws.
General Recordkeeping Requirements
Keeping HR records through a robust document retention policy may be useful to employers for various reasons, including (a) maintaining the corporate memory of the company; (b) satisfying legal or regulatory requirements; (c) preserving documents with an enduring business value to the company; and (d) protecting the company against the risks of litigation and the need to preserve evidence and comply with disclosure obligations as necessary.
However, a balance must often be struck between keeping documents for a sufficiently long period of time, so as to meet an employer’s legitimate business objectives, and not keeping those documents unnecessarily, which could give rise to a breach of data protection laws or otherwise create unnecessary risk.
Most countries have minimum and maximum retention periods for certain HR records. Even if there is no statutory minimum retention period for a certain category of records in a particular country, it is often recommended to retain records until the expiration of the relevant time limits for bringing legal actions or regulatory investigations (statutes of limitations).
In addition to maintaining minimum retention periods, some countries also have maximum retention periods. A record’s survival must often be limited so as to safeguard the privacy of persons whose personal data is contained in that record. In particular, records must be kept for no longer than is necessary for achieving the purposes for which the records were collected or subsequently used. After the maximum retention periods have expired, the documents should be either permanently deleted or anonymized (i.e., all references to data subjects should be redacted so that it is no longer possible to identify those persons).
Labour Law in the UAE does not include specific employer record retention requirements. Employees can bring claims of entitlements under the Labour Law for up to one year from the date on which the entitlement was due. The UAE labour courts have taken a liberal approach to this and have accepted claims filed within one year from when the employee's residence visa and work permit have been cancelled. Separately, under the Civil Code (UAE Law No. 5 of 1985) certain contractual claims may be brought for up to two years after a contract terminates. As a best practice, employers may consider retaining employee data for a minimum of two years after an employee’s termination. Some employers choose to retain data for up to six years, the limitation period for contract claims.
Free trade zones can have separate requirements. For example, the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) set the requirement that employers retain data no longer than necessary for the purpose for which the data was collected. They also set some more specific record retention requirements.
Format of Records
Multiple laws, decisions, and even everyday life practices apply when assessing the retention period of a document. Electronic records are permitted in the United Arab Emirates, under Federal Law No. (1) of 2006, On Electronic Commerce and Transactions. Under this Law, documents, records and information can be retained electronically as long as certain conditions are met (Art. 5). There are some instances where employers may choose to retain certain records required under the UAE Labour Law in hard copy. The Labour Law requires that certain records are maintained "in each main establishment, or branches or locality in which work is carried out." In practice, Ministry of Labour inspectors often request to review hard copies of employee records during periodic spot checks to ensure compliance with the Labour Law.