How to update personnel records-Publication

The magazine "Buhalteriya: prosto, ponyatno, praktichno"

Business Case: In order to verify the accuracy of salary calculations, the accountant needed the time cards. But recently the company reduced its personnel department, and maintenance of personnel records has fallen to the accounting department. We'll tell you how to update the personnel records, step by step.

Collect the records

Step 1. Examine the documents in company's possession starting from when it was legally formed. In particular, do they have:

the company's articles of association;
a resolution regarding the appointment of general director;
an PSRN (OGRN) certificate;
a certificate regarding establishment of an account with the tax authority;
information on open bank accounts;
statements to the insured from the Russian Pension Fund and the Social Security Fund.

The articles of association should contain full and abbreviated forms of the company’s name, information about its location, tmembership and scope of its management bodies, the amount of authorised capital, rights and responsibilities of participants, procedure of document retention, etc. If substantial changes have been made to the articles, for example, replacing the general director or changing the amount of authorised capital, then be sure that these changes have been registered with the tax inspectorate. The easiest thing to do is to request the required statement, which already reflects these changes, from the Unified State Register of Legal Entities at the tax inspectorate immediately after they have been introduced.

Step 2. After the information on file has been examined, check for the presence and completeness of personnel records. Legislation acts provide a mandatory list (table 1) of information for companies.

List of mandatory personnel records

Personnel record	Legal requirement established by
Policy on the internal labour schedule	Article 56, 189, 190 TK RF
Staff schedule	Article 57 TK RF
Documents establishing the policy for handling employees' personal information	Article 86-88 TK RF
Shift schedule (if there is shift work)	Article 103 TK RF
Holiday schedule	Article 123 TK RF
Policy and procedures for safety on the job	Article 212 TK RF
Time sheets	Article 91, 99 TK RF
Orders regarding the appointment of officers	Article 68 TK RF
Orders regarding the dismissal of officers	Article 84.1 TK RF
Labour contracts	Article 56, 57, 67 TK RF
Employment books	Article 65, 66 TK RF
Personal employee cards	Paragraph 12, Order No. 225, dated 16/04/2003, from the Government of the Russian Federation

Step 3. The next step is to analyse the labour contracts that were left by the personnel department. Check ifthey include all of the mandatory provisions listed in Article 57 of the Labour Code of the Russian Federation, namely:

the employee's place of employment;
job responsibilities;
the date of employees coming to work;
compensation package;
the compensation for working under difficult, hazardous, and/or dangerous conditions;
provisions defining the nature of the job (at home, travelling, en route);
provisions regarding mandatory social insurance;
and the work and holiday schedule.

Then compare the pay in the labour contract with that in the payroll. The employee payments listed should correspond to the personnel records. For example, if the records show payment for a non-working day, then check whether the employee's consent was obtained for working on the weekend. (Article 113 TK RF). Also check whether the employee belongs to an entitled class, i.e. whether he or she can even be involved in such work (Article 113, 259 TK RF).

If the labour contracts are missing, their absence is shown in the report or statement.

Step 4. After the labour contracts analysis, the examination of the staff schedule can begin. Remember that it shows the names of the organisational departments, the job positions, and specialisations; and indicates the size of salaries and bonuses. The staff schedule is generally written for a specific period of time. Therefore, each such period must be sequentially verified. After all, this is the document most often required by tax authorities during audits.

Remember
Sometimes foreign employers substitute labour contractswith job offers. They give a brief description of the basic terms of a worker's employment. Russian legislation does not provide for such a document — it must be replaced with a labour contract.

Step 5. Finally, we get to the verification of employment books. Are the employment books all available? Have entries been made for beginning employment? Are the book entries factual? Are there any worn-out or unclaimed employment books?

The results of this check are shown in the acceptance receipt for the records.

Restore deficient records
After accepting the records, the restoration of missing personnel documentation can begin. We offer several practical tips below.

Tip 1. Explain to managers and workers that signing documents which have not been completely filled out by the employer is not allowed. This will protect the company in the future from potential fines. The more honest an employer is with its employees, the more likely to the company will have theirsupport.

Tip 2. Begin the restoration of personnel records with the labour contracts. It's easiest to restore labour contracts and supplementary agreements for current employees, those that have only recently been dismissed, and those with whom contact has been maintained. In this case, it's possible to invite the former employee to the company to sign documents.

Remember
Ideally, time periods should be considered when restoring personnel records. In other words, there should be a focus on the date they were received or when changes were made. However, this does not always happen.

If employees will not agree to sign "backdated" documents, they can be offered a different option, for example, to conclude a labour contract beginning with the current date. But in the section for "date employment began", indicate the actual hire date. Of course, during an audit this most likely won't succeed in avoiding a penalty for a late labour contract. In other words, violating laws on labour or labour safety may incur a fine of up to 50,000 roubles for an organisation or up to 5,000 roubles for an executive (Paragraph 5.27, Russian Federation's Code of Administrative Violations).

Indeed, the employer is required to prepare a written labour contract with an employee no later than three working days from the date employment began (Article 67 TK RF).

It should also not be forgotten that any change to the terms of the labour contract must be established in an agreement between the employee and the employer (Article 72 TK RF).

Tip 3. Attention should be given to the chronology and accuracy of the employment book entries. The entries need to be brought into compliance with the law. The books have to do with strict reporting forms, and they are the first thing to be checked by labour inspectors. The process of maintaining and filling in employment books is regulated by a separate inspectorate that was established by order No. 69 of the Russian Labour Ministry, dated 10/10/2003.

EXAMPLE
The record for hiring an employee has been entered incorrectly. The entry that follows regarding an employee transfer does not contain the reasons for its retraction. To correct errors in an employment book, enter a sequential number and the current date. In the section for "Hiring Information...", write that entry number X is invalid and add an entry about the hire with the correct wording and date. Information on the employee's hire date is also added:

Entry No.	Day	Month	Year	Information about the hiring, transfer to a different permanent job, qualifications, or dismissal (with the reasons and a reference to the article and paragraph of the law upon which the dismissal is based)	The name, date, and number of the document upon which the entry is based.
				Limited liability company Romashka
				Limited liability company Romashka
				(OOO Romashka)
12	16	07	2009	Hired as assistant chief accountant over service providers in the finance department	Order dated 29/07/2009, No. 90/LS
13	22	12	2010	Transferred to the position of financial director in the finance department	Order dated 22/12/2010, No. 158/LS
14	05	04	2011	Entry No. 12 is invalid. On 29/07/2009, hired as assistant chief accountant in the finance department	Order dated 29/07/2009, No. 90/LS

After the employment book entries are verified, the book recording the transfer of employment books is checked. The book should be numbered, bound, and signed by the head of the company. It should also be stamped or have an affixed seal.

Tip 4. It is best to update the staff schedule by time period. The update process depends on the chronology of employee orders, because it is personnel events (transfers, changes in pay) that impact the structure of the staff schedule.

For example, if an employee is transferred to a different department, then check whether his or her position and the corresponding salary are stated in the staff schedule for that period.
If the journal for recording employee orders is missing, then an analysis of pay statements must be made and all changes in pay, position, and department must be identified for the entire update period.

Updating the staff schedule can be done in two ways:

by approving a new schedule;
by amending the existing schedule.

Both ways are correct, but it is best to stick to this rule: it is more reasonable to approve a new staff schedule if the number of changes is considerable. If we're talking about one or two changes, then amending the existing staff schedule is good enough. Issue the appropriate order to this end.

Tip 5. Always analyse the cause and effect relationship between documents. All documents related to personnel records, payment of wages, and accounting are interconnected.

For example, if an employee is on holiday, his or her absence is recorded on the time sheet (Form T-13). Then, on the basis of the time sheet and the order for the holiday (Form T-6), the average pay for the period is calculated (Form 0504425).

Source: The magazine "Buhalteriya: prosto, ponyatno, praktichno", No. 5, 30 August 2011.

By Zulfia Yupashevskaya, Deputy Director of Personnel Services Department,
Outsourcing Division BDO Russia