What Is the Employee Records Exemption?

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Table of Contents

• What Are Employee Records?
• Circumstances When Employee Records Are Collected 
• Reasons Why Employee Records May Be Collected
• Distinguishing Employee Records
• Practical Steps
• Key Takeaways

As a private business owner, you will probably be aware of the numerous privacy obligations you have towards your customers or clients under the Privacy Act 1988. However, you will also need to consider your privacy obligations towards your employees, as you will have access to your employees’ personal information. While the Privacy Act mandates how you should handle personal information, the employee records exemption excludes the information of your workers from these mandates. In this article, we will explain: 

• what constitutes employee records; 
• circumstances when you will collect and use employee records; and
• some practical steps you can take away and implement in your business. 

What Are Employee Records?

As the name suggests, employee records refer to the personal information that you collect about employees. 

This could include any information about their engagement as an employee, such as:

• any training they have had;
• any disciplinary steps that you have taken;
• their resignation; or 
• the termination of their employment.

It also refers to any other personal information that you collect, including:

• details contained in their employment agreement;
• personal and emergency contact details;
• health information;
• dietary requirements;
• membership of professional association or trade union; and
• tax, banking, and superannuation details. 

Dealing with employee records falls under an ‘exempt practice’ under the Privacy Act. This means that the normal rules about the way you deal with personal information do not apply to employee records.

Circumstances When Employee Records Are Collected 

You may have collected employee records when you:

• asked for the information; or
• an employee provides the information voluntarily.

This could have occurred in several circumstances, including:

• when potential employees provide their resume or contact information when applying for a job;
• through the questions you ask during the interview process;
• when onboarding new employees in the contact, tax and superannuation forms they fill out; and
• throughout the employment relationship, through both the hard copy or digital records made about their employment.

Reasons Why Employee Records May Be Collected

Use of employee records should be limited to specific purposes that are directly related to the individual’s employment. Consider the reasons why you collect such records. 

Distinguishing Employee Records

There can be a blurred line between what is and is not considered an employee record. Employee records only include information directly related to a current or previous employment relationship you have with an employee. 

If you handle any personal information that is not directly related to the employment relationship, you are no longer covered by the employee records exemption. This means that you may need to handle that information under the Privacy Act. 

It is important to note that contractors are engaged in a different way to employees. For the records to be employee records, you must be an employer of that individual. When you engage a contractor, you are not their employer and it is a different relationship. Instead, you will need to consider your Privacy Act obligations toward the contractors you engage.

Practical Steps

While the records exemption means that it is not mandatory to comply with the Privacy Act when dealing with employees’ personal information, it is best practice to follow the Australian Privacy Principles (APPs). 

You should also introduce workplace policies covering the usage of:

• email;
• internet; and
• devices.

These policies should be transparent about how employees are to use these technologies and whether you monitor and collect the information transmitted through them. 

Key Takeaways

As an employer, you will likely collect a large set of information about your employees, some that are ‘employee records’ and some that are not. Although the employee records exemption frees you from needing to follow the Privacy Act, it is still a good idea to consider best practice under the APPs. You must ensure that you are only collecting employee records for a legitimate purpose and that you are undertaking the best practice of storing personal information. If you need assistance understanding your obligations around employee records, contact LegalVision’s privacy lawyers on 1300 544 755 or fill out the form on this page.