Why Businesses Should Use Digital Personnel Files

The digitization of personal information has extended to every facet of modern life – from our social media profiles and dating site biographies to our Pokémon Go user accounts. While not all digital profiles are here to stay, from an HR perspective – having all necessary information and files in one place and as accessible as your Pokémon trainer profile is essential. One of the biggest logistical pains in HR is the storage and management of innumerable employee documents. In recent years, more and more businesses are transitioning to digitized employee profiles to improve HR operations.  

What is a digital personnel file?

According to Germany’s Federal Labour Court, a personnel file is the most truthful, accurate, and complete reproduction of an employee’s career. A digital personnel file stores employee data on a central server instead of a filing cabinet, and allows multiple people to access information at the same time.

Which documents are included in a personnel file is largely decided by the employer or HR managers themselves, and businesses can differ enormously in the structure of their personnel files. However, there are some employment documents all businesses in Germany are required to retain.

So what goes in a digital personnel file?

We identified 5 categories of documents for you to consider:

👤 Role

Documents relating to the employment of an employee should serve as the basis of a personnel file. All contractual agreements such as employment contract, associated assets, data privacy agreements, etc. must be included. New hire information such as personal details, bank details, social security, and tax and benefit forms are also necessary for the processing of capital accumulation benefits. For international staff, make sure to collect residence and work permits as well. Information not relating to the employment relationship, such as private activities, political affiliations or religious beliefs should not be included in the personnel file.

√ Employment contract (including appendices and amendments), data privacy agreements, etc.

√ Basic information

√ Bank details

√ Social security information (health insurance)

√ Tax information and benefit enrollment forms

√ Residence and work permit (if necessary)

🙌  Team

It can be useful to organize employee personnel files in alignment with departments, especially if corporate structure impacts access permission to information. Knowing which departments your employees belong to can help clarify the distribution of tasks and to whom you can turn to for specific questions. You should also obtain records that specify which employees are superiors, who they manage and what level of access they have to employee information. This way, it is easy to identify the responsible person for individual employees.

√ Department assignment

√ Superiors structure & access control

√ Responsibilities

🏆 Experience

Documents related to an employee’s qualifications must be included in a personnel file. From CV and aptitude tests before the start of employment to certificates gained during employment, these records contribute to an employee’s overall employment profile. Any target agreements and performance goals can also be added to illustrate an employee’s development. As professional courtesy, subjective assessments and specific comments about work behaviour should not be included. However, warnings and disciplinary actions may be useful in the future against employee claims.

√ application documents and CV (if necessary)

√ certificates & aptitude tests

√ target agreements and development talks

√ performance appraisals and development protocols (reports & statistics)

√ training records

√ warnings & pink slip

Time sheet

Information related to working hours is an important part of an employee’s employment history. From time sheets for working students and freelancers to sick leave and trial period records, all of these data are relevant for payroll and accounting purposes. When it comes to illness, you should only retain records relating to the amount of time an employee was out of office due to illness. Due to employee confidentiality concerns, documents such as medical records and health history should not be included in the personnel file.

√ hours / time sheets

√ holiday periods (applications & grants)

√ sick leave (if applicable certificate)

√ trial periods

🎒 Inventory

Some employers provide employees with company assets, such as computers, vehicles and other special materials. The handout date, status and location of such assets should be documented and included in the personnel file of the corresponding owner. This will provide you with a better overview of your company inventory.

√ Inventory lists with associated status

√ Inventory items such as. Laptop, mobile phone

√ company cars

The personnel file should not be a scrapbook of all existing information about your employees. But as our list demonstrates, the number of required documents is quite extensive. Some HR managers may also keep additional documents “just to be sure”, and it’s not hard to understand why when we take the German bureaucratic system into consideration. Personnel files can easily lead to overflowing cabinets, which is why adopting digital personnel files can be beneficial.

In addition to helping your business save space, here are four benefits of digital personnel files:

1. Simplified HR processes

Imagine HR without tedious and labour-intensive administrative tasks.

Converting to digital personnel files simplifies many administrative HR processes. This is especially true if your business also uses an HR management software in combination with electronic employee records. Employee information is inputted online within a few clicks, and a variety of documents can be generated automatically, such as employment contracts, pay slips and tax forms. Digital personnel files are also much easier to maintain. Changes in one area directly pushes to the next to save you time and effort, and systematic updates to master data reduce the likelihood of errors and redundancy.

2. Greater access & more transparency

Have you ever dug through piles of paper just to find one piece of information?

Since digital personnel files are stored on one central server, all your employee information are immediately available at hand. This not only reduces the amount of wasted search time, but also allows you to access information you need from anywhere at anytime.

Digital personnel files also improve transparency in two ways. You gain a comprehensive overview of all your employees and their development, which will help you better manage your team. Employees no longer have to e-mail HR to get informed on things like vacation allowances and payday details. With self-service portals, they can answer these questions for themselves and manage all personal information at their convenience.

3. Improved data protection

Due to the amount of sensitive information within personnel files, data protection is a paramount concern. For companies with traditional personnel management, it is more difficult to safeguard employee information from unauthorized access because physical documents can easily get lost or misplaced. With a digital management system, information access is much more controlled. Employee user accounts are allocated with varying levels of access permission to ensures confidential information stays in the right hands. HR management systems also comply high safety standards and the latest technologies to add another layer of protection to employee data.

4. Environmentally-friendly

The biggest advantage of using digital personnel files is the reduction of paper waste. In Germany, there are extensive legal regulations regarding the retention of employment records. The limitation period of claims for former employees is three years, so general personnel records must be kept equally as long. Documents with fiscal relevance must be kept for a minimum of six years, documents related to operating profit for ten years and documents related to pension for up to thirty years. That is a massive amount of files for businesses to archive. The digitization of personnel records not only facilitates the storage of documents, but also allows companies to leave a much smaller carbon footprint.


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