At a high level, most data privacy legislations in APAC does not include a specific retention period and will instead have a general principle that a company should retain personal data for only the period necessary for its original purpose, and as short a period as possible. In addition, APAC data privacy legislations will normally have a clause that states that if any other related local legislation requires the company to retain or process the related personal data, the corresponding requirements of that local legislation shall prevail (e.g. – if a company is required to retain employee information for 7 years for tax purposes). This clause is included in China’s PIPL, Hong Kong’s PDPO and Singapore’s PDPA, as well as EU/UK’s GDPR.
As such, given the retention period is not strictly defined, but follows the storage limitation principle, most companies will generally reference other local legislation time keeping requirements (e.g. – local taxation, financial or industry regulatory legislation) as the baseline for the period that they need to retain payroll data or any contractual commitment periods. Accordingly, this means that the period personal data can be retained is dependent on a number of factors including:
- The nature of the data and what local legislation applies to that data (e.g., personal ID vs. bank account information),
- The industry the business operates in (e.g., certain businesses may be subject to financial regulation legislation),
- The reason for why the information was originally collected for (e.g. retention of personal data collected during a recruitment process should generally not be retained for a long time if the candidate is not employed).
Examples of data types and how long they should be retained based on some of the major locations in APAC are included below:
In summary, the period that employee records can be retained for payroll purposes will depend on the nature of the data, the reason for collection and will be business specific but ultimately should be aligned with the transparency, lawfulness and fairness principles of data privacy (e.g. disclose in contract with data subject consent).
Common questions asked:
- What are payroll records?
- Payroll records are comprehensive documents and data sets that employers maintain to keep track of their employees’ compensation and related financial information. These records are crucial for ensuring legal compliance, accurate financial reporting and providing documentation for both employers and employees.
- What documents make up payroll records?
- Employee Information
- Time and Attendance Records
- Salary and Compensation Details
- Tax Withholding Records
- Payroll Registers and Reports
- Benefits Deduction Records
- Payment Method Records
- Payroll Tax Records
- Employment Contracts and Agreements
- Time-Off Records
- Expense Reimbursement Records
- When does payroll record retention begin?
- Payroll record retention typically beings when an employer hires an employee or when the first payroll transaction occurs.
- Why is employee data retention important?
- Employee data retention is crucial for legal compliance, business operations and resolving disputes. It ensures that organisations have access to necessary information for tax purposes, audits, legal inquiries, and employee-related matters.
- What happens if I don’t retain employee data as required?
- Failure to retain employee data as required by law or industry regulations can result in legal penalties, fines, and potential legal disputes. It is essential to comply with data retention laws to avoid legal consequences.