All employers will use some form of payroll software to hold and use their employees’ personal data. Employees will usually provide personal data to their employer at the beginning of their employment, as well as through certain legal documentation such as a P45. It is your employer’s strict responsibility to handle your personal data carefully and comply with data protection laws such as the Data Protection Act 2018 and the General Data Protection Regulation (GDPR).
What counts as personal data?
Personal data includes everything from your name and contact details to your payment details and tax information. Employees with particularly sensitive personal data, such as employees who belong to a trade union, will need to receive an even greater level of protection from their employer.
How data protection laws protect your personal data
Due to the sensitivity of your personal data, and the laws which govern the way your employer handles and uses this data, employers are legally required to abide by a set of principles when handling your personal data for payroll purposes. The following principles are intended to provide employees with confidence that their personal data is being handled with the strictest care.
Lawfulness, fairness, and transparency
Compliance of the law should always be of the utmost importance when handling sensitive personal data.
Purpose limitation
In the case of payroll, an employee’s personal data has been collected strictly for purposes of receiving pay and having the correct tax deductions made. This must be the only reason this data is used by payroll administrators.
Data minimisation
Only the necessary data should be collected by payroll administrators for the specific purpose of carrying out payroll functions.
Accuracy
The personal details held and used by employers must be kept up to date as far as this can reasonably be done. Data must also be accurate to avoid any errors in data handling.
Storage limitation
Sensitive personal data must be securely destroyed once it is no longer needed. However, personal data can be kept in accordance with the accounting rules on the retention of payroll records.
Integrity and security
Employers must have a secure system in place for storing sensitive personal data. These systems should be well-maintained to prevent cyber threats and other digital risks.
Accountability
By collecting, handling, and using sensitive employee data, employers accept responsibility for complying with these data protection principles and must keep safe, thorough records to demonstrate this.
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