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Read all about the structure, features, benefits, and unique aspects of the digital personnel record. You’ll also learn what factors to consider when using and storing sensitive documents, and how a document management system can help optimize existing HR processes.
Job applications, overtime reports, employment contracts, reference letters, termination notices, and many other documents are filed and processed daily in human resources departments. The associated documents pile up into chaotic mountains of paperwork, and the underlying processes are virtually impossible to manage manually. The solution for human resources management is the digital personnel record (also known as an electronic personnel record or digital employee record).
The purpose of the digital personnel record is to manage all employee documents that are relevant to the employment relationship. With a digital personnel record, the necessary documents and information are stored and processed digitally using software. This simplifies administrative tasks for HR professionals and makes the entire HR process more efficient.
Many companies already have a mobile workforce, and trends and digital methods in human resources management require access to personnel records regardless of time or location. The fact that more and more companies are turning to HR digitization is primarily due to the streamlining and increased efficiency of work processes, as well as the need to manage sensitive data in a legally compliant manner.
The electronic employee or personnel record stores all employee documents and information in one central location. Job applications, employment contracts, travel expense reports, and training records are archived digitally. Only authorized employees and supervisors have access to this digital filing cabinet. This is independent of the company's location, and documents can be processed from anywhere. This allows managers to access the necessary documents and make quick decisions, even without being physically present in the HR office. It is very easy for HR staff to add additional documents to an existing record or to create a new record.
With analog systems, the volume of documents that need to be filed makes day-to-day work more difficult, and potential errors in manual filing complicate and delay subsequent searches. With a digital personnel record, all documents can be quickly located using the search function. Filing and quickly locating documents saves HR staff a lot of time and resources.
Ever since the introduction of the General Data Protection Regulation (in effect since 2018), HR professionals have faced the challenge of securely managing personal data. Employee records managed using software help ensure compliance with data protection requirements in a legally compliant manner.
Electronic personnel management is useful for every HR department. Stricter legal requirements and the growing volume of various documents make manual management (almost) impossible and are extremely time-consuming.
Digital personnel records offer many advantages for both large companies and small and medium-sized businesses.
Digital personnel records are very beneficial for companies,
Digitizing personnel data makes the work of HR departments easier because personnel data and records can be created more quickly and made available to authorized users company-wide at any time for viewing or further processing. The structure is not mandated by law and can be customized by each company. However, it is advisable to keep a few points in mind:
Human resource management (HRM) is a key hub within a company; there are hardly any departments that do not interact with or have points of contact with HR. By introducing digital personnel files, companies create significant benefits for their HR departments and add value for the entire organization.
Access rights determine who is authorized to access personnel records. This ensures that only authorized users have access to sensitive data:
You can also specify on an individual basis which permissions to assign to which people:
The personnel record contains sensitive personal data that is subject to data protection laws. The digital personnel record stores and processes personnel data in accordance with the provisions of the General Data Protection Regulation (GDPR) and the German Federal Data Protection Act (BDSG). These are stored in the electronic file only for as long as necessary (statutory retention period). Automated deletion features and reminders help ensure that no deadlines are missed. Beyond compliance requirements, electronic archives are significantly more secure than physical filing cabinets. Even if filing cabinets are “supposedly” locked, they are opened time and again; files are removed and end up on the desks of employees or supervisors, where they can be more easily viewed by unauthorized individuals.
All work-related employee documents are compiled in one place. In addition to centralized archiving, organization is a key advantage. You no longer need to wonder whether there is a more recent version of a document or to find out who made the most recent changes – versions are clearly identifiable in the digital personnel record. To ensure that personnel data is always up-to-date and accurate, employees can update their own information, such as their master data, directly.
In many human resources departments, employee records are still managed in a traditional manner: in physical filing cabinets and archives with documents filed and retrieved manually. The routine tasks involved in this process are very time-consuming and costly. The electronic management of personnel records results in significant cost savings. The benefits are most evident when you avoid using isolated digital solutions (such as storing individual documents in decentralized locations and across different archiving systems) and instead integrate the digital personnel record software into the ECM.
Digital personnel records, automated document generation, and self-service access for employees and managers save the HR team up to 50 percent of their working time. Time that can instead be devoted to strategic and advisory tasks.
The digital personnel record software can be easily integrated with Microsoft Office. This way, correspondence via Microsoft can also be added directly to the digital personnel record, or vice versa: Documents from the digital personnel record can be further processed using Microsoft Office applications.
For companies that do not use enterprise-wide software such as SAP, MS SharePoint is an ideal platform for HR data. In addition to personnel records, the SharePoint platform can be used to support other applications such as applicant tracking, suggestion programs, knowledge management, and personnel planning and controlling. This is a web-based application that does not require local installation on employees' computers.
Paper files take up a lot of space, require cabinets, and may even need entire rooms. As the number of employees increases, additional resources and storage space must always be made available. Digital records free up space in physical filing cabinets, and the digital archive can grow along with the workforce without requiring additional space.
Digital personnel records free the HR department from time-consuming routine tasks and give employees more time to focus on strategic tasks. With a context-based, intelligent search, you can quickly and easily find any file and any document within that file. Automating processes improves the department's efficiency and reduces errors.
When HR documents no longer need to be created, managed, searched for, and processed manually, it takes some of the burden off the HR team. Eliminating routine tasks frees up resources for new, value-adding tasks that employees can take on (employee experience).
Everything related to digitalization, technologies, and new processes
Despite all its advantages, there are also a few things to keep in mind when it comes to electronic HR management that could act as stumbling blocks and make the transition to digital personnel records more difficult for you:
The purpose of the electronic employee record is to streamline the tasks and processes of human resources departments. It puts an end to confusing paper files and stacks of paperwork, as well as misfiled documents. To this end, it supports legal requirements.
There are no legal requirements regarding how you must create your digital personnel record. Nevertheless, there are some regulations that specify which documents may be included in the digital personnel record and which may not.
Employment references, performance reviews, written warnings, and terminations
Employment contracts
Bank information
Reports of workplace accidents
Correspondence between employees and supervisors
Payroll statements
Garnishments and employee loans
Tax documents
Application documents
Including cover letters, CVs, employee questionnaires, recommendations, references, work samples, etc.
Requests and approvals
Leave, business travel, professional development
Social security documents
Such as health insurance confirmations and retirement benefit agreements
Other documents
such as photos
Private matters
Employee reviews
Works council candidacy
Sick leave, medical reasons, and other medical documents
Political and religious activities/views
Social media posts
As of January 1, 2022, certain parts of the digital personnel record have become mandatory: An amendment to the German Social Code (section 7 of the SGB IV Amendment Act) stipulates that, effective January 1, 2022, certain compensation records must be maintained exclusively in electronic form. Starting at the beginning of 2023, all relevant data for tax audits must be submitted electronically. These are the following payroll records:
Ask your employees to submit these payroll records in digital form. If the documents are available only in paper form, you, as a business owner, must ensure that they are digitized. You can save the documents in any file format, unless a signature is required, such as for the pension exemption for people with mini-jobs. If the document bears a digital signature, the original document does not need to be retained. If the document does not contain an electronic signature, it must be scanned and digitized, and the original document must also be retained.
Whether it's job applications or employment contracts, pay stubs or written warnings – HR departments handle sensitive data more than almost any other department in a company. Whether in analog or digital form, personnel records must comply with the following principles:
Confidentiality
Correctness
Transparency
In addition to the principles of record-keeping, personal data requires special protection. As a business owner, you are required to comply with the data protection obligations set forth in the General Data Protection Regulation (GDPR) and the German Federal Data Protection Act (BDSG).
If you work with personal data, you must comply with certain legal requirements. For a digital personnel record, audit compliance means the secure, tamper-proof, and legally compliant storage of digital information. The following regulations apply with regard to audit compliance:
The Association for Organizational and Information Systems (VOI e. V.) has developed ten requirements for audit-proof archiving:
Compliance
Compliance with the principles
Completeness
Verifiability
Immutability and tamper-resistance
Security of the entire process
Traceability
Use by authorized persons only
Reproducibility
Prevention of unauthorized deletion
As an entrepreneur or HR manager, you’re surely asking yourself: Which documents must be retained, for how long, and why? Keep records related to your employees even after they leave the company to protect yourself against potential future claims. Please note that many documents have different retention periods:
There is no statutory retention period for general personnel documents (e.g., employment contracts, employment references).
Information relating to remuneration must be retained for five years (165 I 1, IV 2 SGB VII).
Working time records must be retained for two years (16 II ArbZG).
Job applications may be retained for three months up to a maximum of six months after rejection (26 BDSG n. F., section 15 IV AGG). This requires that the applicant has been informed about the storage of their data (section 13 GDPR). For longer retention of application documents, separate consent must be obtained from the applicant.
There is no statutory retention period for certificates of incapacity for work (sick notes).
Documents relating to occupational pension schemes must be retained for 30 years (18a BetrAVG).
Tax-related documents (social security contributions, church tax, wage tax) must be retained for six years. If the documents are relevant for determining business profits, they must be retained for ten years (147 AO, section 257 HGB).
Contribution statements submitted to social security institutions must be retained for five years (section 165 SGB VII).
Payroll lists must be retained for ten years (147 AO, section 257 HGB).
Wage records must be retained for six years (147 AO, section 257 HGB).
Documents relating to employee insurance must be retained for ten years (147 AO, section 257 HGB).
Payroll accounts of former employees must be retained for six years (section 41 I 9 EStG).
Not all documents for the personnel record are always available in digital form. The necessary documents can be scanned either in-house or by an external provider. The advantage of the external solution is that it saves time and staff resources. If you plan to scan documents in-house, you must ensure that the necessary technical equipment and available staff are on hand.
Regardless of which solution you choose, you must determine in advance which paper documents may be discarded (shredded) after they have been scanned. Despite the digitization of personnel records, certain documents should also be kept in paper format, such as employment contracts (fixed-term contracts and those containing post-employment non-compete clauses, notices of termination, and mutual termination agreements). If any problems arise after the employment relationship ends, you will have supporting documentation. In the event of a lawsuit, courts prefer paper documents as evidence.
By law, you may not destroy tax documents (pay stubs and/or income tax cards) until seven years have passed, or until ten years have passed if they are relevant to the determination of profits. You may also destroy social security contribution records only after five years.
In general, you can use the digital personnel record in three different scenarios. Which one is the “best” depends on your company’s specific circumstances and goals.
Digital employee record software simplifies your HR management. When used on its own, it serves as a central (digital) repository for all relevant personnel documents. If you use digital personnel record software as a standalone application, you’ll benefit from its clarity, the ability to quickly locate documents, the ease of processing documents, and legal compliance. No more time-consuming searches for individual documents or cumbersome paper-based record-keeping. Multiple people can work on and with the documents at the same time – regardless of location or time. Additional documents can be easily added, and the file can be expanded as needed.
If you want to integrate the digital personnel record with other HR tasks (digitization of the HR department), the personnel record software can be expanded using modules and combined into a comprehensive digital HR solution. The following solutions, among others, can be integrated:
These days, applicants are rarely willing to print out their application portfolios and send them by mail. Online applications are the norm these days. A digital recruiting platform gives many HR departments and companies a significant competitive edge: All application materials are electronically archived and managed in the applicant management system. This way, recruiters have all the information about the applicant readily available. This takes some of the burden off the HR department and makes a good impression on applicants.
Once applicants have become employees, digital human resources management continues: From onboarding and goal-setting to feedback sessions. With automated onboarding, data from the applicant tracking system can be transferred directly into the digital personnel record. Employees enter their own information online. HR managers can use this to ensure that data is not entered twice and to avoid data entry errors – such as those involving bank or insurance account numbers – which can affect data quality. After recruiting, HR departments use electronic personnel records to synchronize HR processes and initiate workflows for this purpose: Processing vacation and business trip requests, managing work hours (i.e., tracking hours worked, including overtime), or handling supplementary agreements.
Mapping the digital personnel record in enaio®
The digital personnel record can be used to store all important information related to the employment contract, such as vacation entitlement. If you now link time tracking to the digital personnel record, the hours worked will be automatically reconciled with the scheduled hours. Many module extensions also make it easy to manage vacation time, as well as to report sick from home. The sick days are then automatically deducted from the scheduled hours.
If you already store and manage employee data centrally in one place, payroll processing can be supported digitally. Payroll-related data comes from the digital personnel record, and by integrating systems such as DATEV payroll software, you can electronically transfer the data to payroll processing. A digital payroll system can replace paper-based payroll processing.
Efforts to further digitize your HR management in order to increase your company’s agility, reduce costs, and create room for innovation work best when you integrate the digital personnel record into a DMS (document management system) or ECMS (enterprise content management system). In the DMS, you consolidate all of the company's documents – regardless of department or function – with the goal of better managing overall business operations and making the ever-growing volume of data available in one central location. The ECM, as a management platform, provides you with the technical capabilities needed for this.
When you integrate the electronic personnel record into software such as a DMS or ECM, you can take full advantage of the possibilities offered by digitization. “Seamless digitization” offers a wide range of benefits:
If you already store and manage employee data centrally in one place, you can use digital tools to support payroll processing. Payroll-related data comes from the digital personnel record, and by integrating systems such as DATEV payroll software, you can electronically transfer the data to payroll processing. Digital payroll can replace paper-based payroll processing.
Electronic records are the foundation of digital transformation in HR departments and throughout the entire company. To make quick decisions, entrepreneurs need an immediate overview of documents, records, data, and facts. This applies not only to existing documents such as employment contracts or bonus agreements, but also to notes, supplementary agreements, and correspondence. You can make all documents available at the click of a button: whether by name, date, metadata, or full-text search. Misunderstandings and unnecessary communication are eliminated because you can see exactly which documents were edited, when, and by whom. The data in the digital personnel record itself can be easily exchanged. While companies without a DMS send countless e-mails with compressed and encrypted attachments, employees use the DMS to exchange the relevant HR documents in a way that conserves resources and complies with the GDPR.
If you want to “manage” your company’s knowledge efficiently, you need to provide your employees with appropriate training materials in digital format across various channels and levels. Accessible at any time and from any branch office, location, or home office. Enterprise content management (ECM) helps you strategically manage the knowledge within your organization as a key resource and make it available to your employees as needed. Learning management systems or learning experience platforms allow your employees to independently sign up for online training and access a variety of learning materials. Managing these processes through HR and saving the results in the digital personnel record is just as beneficial for employee reviews as it is for personnel development and planning.
To efficiently organize cross-location teamwork, entrepreneurs need tools that make this integration flexible and efficient. Collaboration tools can help HR professionals and business owners facilitate communication and the flow of information within interdisciplinary teams. Social collaboration tools, such as Arsana, Slack, or Microsoft Teams, are knowledge and project management platforms where remote workers and/or colleagues from abroad, as well as student workers, collaborate. An ECM is well-suited to serve as the hub and control center for social collaboration:
REWE Dortmund SE & Co. KG is a joint venture between REWE Dortmund and the REWE Group. REWE Dortmund’s approximately 400 supermarkets in North Rhine-Westphalia include 103 REWE stores operated by the Michael Brücken Group (“REWE”), two department stores operated under the REWE-Center brand, and six supermarkets operated under the “akzenta” brand. REWE Dortmund employs more than 20,500 people (2022). Consequently, the HR department faces significant challenges when it comes to hiring, onboarding, and training.
Sabine Poéll from the HR department at REWE Dortmund wants to improve the resources in the HR department: “It’s not the job of HR specialists to check off boxes in Excel spreadsheets and monitor them.” How can we make more efficient use of our specialists' time? Manual processes are very slow and prone to errors. "In addition, employees should be able to clear their minds for new projects and tasks without being burdened in the background by the stress of administrative tasks."
When deciding to digitize manual processes, the company chose the enaio® ECM system by OPTIMAL SYSTEMS. One of the first tasks was to help new employees relax during the onboarding process. The OPTIMAL SYSTEMS project manager was also involved in the process design from the very beginning. To illustrate his point, he demonstrated a standard version. REWE Dortmund has incorporated its own requirements and preferences into this version. The result was a solution tailored specifically to REWE's HR needs.
Thanks to digitization with the enaio® ECM, we save a lot of time, and the error rate drops to nearly zero. Plus, you don't have to constantly wonder if you've thought of everything. A glance at the dashboard provides the answer and relieves the tension.
Sabine Poéll, REWE Dortmund
There are many providers of digital personnel record software. Determine what you need a digital personnel record to be able to do before you contact providers. It's best to start by thinking about your ideal digital personnel record. What features should it have?
The digital personnel record uses software to digitally store and manage all documents related to employees' employment relationships.
The key benefits of digital personnel records include increased efficiency, time savings, cost reductions, and a reduction in paper and space requirements.
Personal data is predominantly confidential and requires special protection under the GDPR. Access rights for all levels – for editing and reading – ensure protection. In addition, data is encrypted during transmission.
The software solutions ensure that audit compliance requirements – such as traceability, immutability, indestructibility, and recoverability – are met.
As of January 1, 2022, it is mandatory for certain payroll documents – such as proof of insurance coverage or exemption from insurance, posting, and health insurance membership certificates – to be available in electronic form.
There are no legal requirements regarding how to set up a digital personnel record. Files are usually organized into folders and subfolders. Employee master data, application documents, social security documents, vacation requests, employment contracts, bonus agreements, termination letters, and correspondence should be included in the digital personnel record. Personal information, such as religious or political views, medical conditions, medical records, and social media profiles, does not belong in a digital personnel record.
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