An ex-employee questions a settlement figure from last March. The person who calculated it has left. The spreadsheet is on a laptop that was reissued. What survives is a single net figure in the accounts, and no working.

The figure was probably right. It is now indefensible, and the cost of that is not the disputed amount, it is the three days somebody spends reconstructing it.

What the law expects you to hold

Under the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, the Factories Act, 1934 and the Payment of Wages Act, 1936, together with their provincial successors, an employer maintains registers of the people employed, their wages, the hours they worked, the leave they took, and the deductions made. The exact registers and their prescribed forms vary by province and by the act your establishment falls under.

Rather than restate forms that differ, it is more useful to describe what any of those registers has to be able to answer, because that is the same everywhere:

  • Who was employed, in what capacity, from when to when
  • What each person was paid, broken into its components
  • What was deducted, under which head, and on what authority
  • What hours they worked, including overtime
  • What leave they took, from which entitlement

If your records can answer those five for any month in the last several years, you are in good shape regardless of which form the register is meant to be on.

The four that are always missing

The reason for a deduction. A payslip line reading "Deduction 5,000" is not a record. Under the Payment of Wages Act deductions are permitted only under specified heads, and a deduction whose head nobody can name is one you cannot defend. Record the authority alongside the amount: an advance recovery, a statutory contribution, a loan instalment, an authorised absence.

The rate in force at the time. EOBI bases, social security ceilings and tax slabs change. A payroll system that holds only the *current* rate cannot explain a payslip from two years ago, and recalculating an old month with today's rates produces a figure that has never been correct. Rates need effective dates and old ones need keeping.

The raw attendance, not the derived total. A stored "22 days present" is a conclusion. The punches are the evidence. When somebody disputes a day, the answer is the times recorded, and a system that overwrote them with a total cannot give one.

Who changed what. The record that a salary was 50,000 and is now 65,000 is useful. The record of who changed it, when, and from what, is the one that settles an argument. Most systems have the first and not the second, which is why "audit log access" appears in every procurement questionnaire.

How long

Retention periods are set by the acts and by tax legislation, and they differ. The practical answer most companies land on is to keep payroll records for at least six years, because tax assessments can look back further than most employment claims, and to keep the employee record itself for the duration of employment plus a substantial period after.

Check your province's requirement rather than adopting a number from an article. But the shape of the answer is "years, not months", and any system that prunes payroll history to keep a database small is solving the wrong problem.

The part that is not about law

Records exist to answer questions. The test of whether yours work is not whether a register exists; it is whether somebody who was not there can answer a question about a month they did not run.

That points at three things worth doing regardless of what any act requires:

Show the working on the payslip. A settlement or a payslip paid as a single figure invites a question you then reconstruct. One that shows its components is rarely queried at all.

Freeze a posted payroll run. Once a month is paid, a later data fix should not silently recalculate what was already paid out. A run that can be recalculated forever has no historical figures, only current ones.

Make the export the same as the screen. If a report and an export can produce different numbers for the same month, both become unusable the first time somebody notices, because neither can be trusted without checking the other.

Caveats

The registers, their prescribed forms and retention periods differ by province and by which act applies to your establishment. Verify against the act that binds you. This is a description of what the records need to do, not legal advice, and it is not tax advice.

Where the software fits

Work Mint keeps the raw punches alongside the derived totals, holds statutory rates and tax years with effective dates so an old month recalculates at the rates that applied to it, lets a posted payroll run be locked against later recalculation, and records who changed pay, role, bank details and leave entitlement in an append-only audit log that a Super Admin can export.

If you want your current records tested against the five questions above, ask us at info@workmintpeople.com.

Sources: the Payment of Wages Act, 1936, the Factories Act, 1934, and the Industrial and Commercial Employment (Standing Orders) Ordinance, 1968, together with their provincial successors, as published by the provincial laws portals and the ILO NATLEX database.