A document retention policy is a plan outlining how you expect your employees to manage, retain and dispose of company documents and records. Over the lifetime of your business, your company will inevitably collect thousands of documents and records. You might store these documents in overflowing filing cabinets or they might merely take up storage space digitally. Given that businesses must comply with a range of legal requirements that dictate how long they must keep long documents, it is important to have strategies in place for how you will manage your documents. A document retention policy is a good way to keep track of the various minimum requirements for retaining documents. This article explains:

  • why you need a document retention policy; and
  • how to create a policy that best protects your business. 

Why Do I Need a Document Retention Policy?

A document retention policy is a good way for your business to plan how it intends to deal with its documents and records. This is important because you need to balance the competing priorities of: 

  • retaining documents for legal requirements; and 
  • not holding onto documents for too long because it can be expensive and pose a security risk. 

For example, you may not want to hold onto someone’s personal information for too long. This is because you will incur the legal responsibility for sharing confidential information if that personal data is taken or accidentally disclosed. 

When thinking about your business’ document retention obligations, you will need to consider whether:

  • certain documents hold particular significance for your business;
  • there is a legal requirement in any legislation that you hold a particular document for a certain amount of time;
  • you will require any documents in any current or potential future legal dispute (for example, in a court proceeding);
  • the destruction of certain documents could cause a court to infer that you acted in bad faith (for example, that you destroyed documents to remove evidence);
  • the information came from a source with certain retention requirements; and
  • the purpose for which the information was collected is still relevant.

How Do I Create a Document Retention Policy?

Document retention policies will not be the same for every business. This is because each business: 

  • conducts different activities with different levels of risk (for example, the tobacco industry);
  • is controlled by different regulatory requirements;
  • holds different types of documents; and 
  • has unique financial and space constraints. 

For this reason, it is important that you take the time to consider your own business’ situation. This will help you to put systems and strategies in place that are appropriate for your business. Taking a systematic approach to document retention, as opposed to an ad hoc one, will help your business: 

  • be more efficient; and 
  • reduce the risk of a court inferring that your business destroyed documents on purpose to cover something up.

When thinking about your business’ approach to document retention, you consider the steps below.

1. Evaluate the Types of Documents that You Work With

Start by conducting an audit of your business, to find out what types of documents you hold and where you store them. 

Once you have a list of the sorts of documents your business works with, you should assess whether there are any legal requirements for how long you must keep the documents. Keep in mind that these are only a minimum period. To err on the side of caution, many businesses will add a period of time on top of the minimum period in case an unexpected event arises. 

For example, planning to hold your records for slightly longer than the legal requirements can be helpful if minimum retention periods are extended.

You should also account for: 

  • any other reasons your business may need to keep documents longer than those mandatory periods; and 
  • how long you will keep documents that do not have any legal requirements. 

For example, it is a higher risk to run a car manufacturing business than it is to operate a t-shirt shop. Therefore, you may want to hold onto some documents for longer because you know there is a risk of someone making a claim against you.

2. Plan to Store Your Documents

You need to work out how you are going to capture and store your documents. This may involve: 

  • categorising documents; 
  • arranging them in a logical manner so that you can find them easily; and 
  • implementing a system of registration to record the existence of documents that you have.

You should also consider whether to restrict access to some documents to certain people within your organisation.

3. Decide How You Will Dispose of Documents

It is important to establish: 

  • a process for how to dispose of documents; and 
  • whether these sorts of decisions are to be made by senior members of your business. 

Any sensitive commercial information should be confidentially destroyed, for instance, by shredding the documents. If stored electronically, you should subject the sensitive information to secure electronic deletion.

4. Appoint a Document Retention Officer

Consider whether you will appoint someone as a document retention officer. This makes one of your employees responsible for maintaining and implementing your document retention systems. They will also become the first port of call for other employees that have questions. 

5. Draft Your Document Retention Policy

After considering the various points outlined above, it is time to draft your document retention policy. This should capture your new system and guidelines for employees in writing.

What Documents Should be Covered?

Your document retention policy should cover both physical and electronic records generated in the course of your business’ operations. This may include:

  • paper documents – both originals and copies;
  • digital documents and records such as emails, videos, audio and photographs;
  • contracts, invoices, orders and insurance policies;
  • corporate documents such as your shareholders agreements and company minutes and resolutions
  • financial and tax documents;
  • employee records; and
  • data generated by your systems.

Tips to Ensure Your Policy is Effective

To ensure that your document retention policy is successful, you should:

  • communicate the policy to all levels of your business; 
  • train employees on how the policy works;
  • appoint responsibility to different individuals to help implement and manage the policy;
  • build automated processes to help with the retention and disposal of documents;
  • ensure your business follows the processes it has decided on; and
  • regularly review your policy in light of any changes in the law or your business.

Key Takeaways

A document retention policy is a good way for businesses to document their intentions with regards to document retention and disposal. It should: 

  • outline your business’ internal systems for retaining and disposing of documents; and 
  • provide guidelines on how long different documents should be retained.

Importantly, the policy is only a statement of intent. You also need to make sure that all of your employees follow the document retention processes that you have decided to implement. If you need assistance with preparing a document retention policy, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Lauren McKee
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy