Managing employee data: Best practices for 2025 | weBlog

Managing employee data is not just an administrative activity, it is a cornerstone of the day-to-day running of a business and its compliance with the law. Accurate and secure data management is the basis for payroll, regulatory compliance and strategic decision-making by management. In this article, we review what managing employee data actually means, what data should – and more importantly, can – be recorded, and how to do it more efficiently using modern digital tools.

What is employee data management and why is it important?

Employee data management includes the collection, storage and systematic recording of all employee-related data. And a lot of this information is collected during the employment process, as it is essential for corporate HR processes, payroll, time and attendance or leave management.

Accurate and legally compliant data management not only promotes internal efficiency but also protects the company from legal and financial (penalty) risks. A well-maintained record allows managers to make informed decisions about their workforce, for example in terms of staff management or performance appraisals.

The main types of data recorded

By type, the following data occur most frequently:

Personal data: name, date of birth, address, tax identification number and social security number. This data is called master data, but it can only be collected to the extent and in the manner that is following GDPR rules.

Employment data: job title, start and end of employment, contracts and any changes to them. This information is essential for labor compliance and the smooth running of internal processes.

Financial data: record wages, benefits, overtime and related contributions. Accurate management of these records ensures the accuracy of payroll accounting.

The absence or inaccuracy of this data can lead to operational and legal problems, so accurate record-keeping is a priority.

Legal requirements for the processing of employee data

The processing of personal data is subject to strict rules, particularly the GDPR (General Data Protection Regulation). The GDPR not only lays down rules on the collection and storage of data, but also requires, among other things, that employees are informed, and that data integrity and retention are ensured. Below are the key obligations under the GDPR (6+1) principles:

• Lawfulness, fairness and transparency: processing must be lawful, fair and transparent for the data subjects.
• Purpose limitation: personal data must be collected only for specified, explicit and legitimate purposes and not processed in a way incompatible with those purposes.
• Data minimization: data processing must be adequate and relevant in terms of the amount of data processed and only the necessary amount of data should be processed.
• Accuracy: personal data must be accurate and, where necessary, kept up to date; all reasonable steps must be taken to ensure that inaccurate personal data is promptly deleted or rectified.
• Limited storage: personal data must be kept in a form, which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed.
• Integrity and confidentiality: data must be processed in such a way as to ensure adequate security of personal data, including protection against unauthorized or unlawful processing, accidental loss, destruction or damage, by implementing appropriate technical or organizational measures.
• +1 Accountability: the Controller is responsible for compliance with the above and must be able to demonstrate such compliance.

This latter provision implies the liability of the Data Controller and that the breach of the principles entails various adverse legal consequences (fines proportional to the seriousness of the breach or even damage to the reputation of the company).

In addition to the above, it is particularly important to choose the right legal basis for data processing, especially because of the diversity of the employer’s data. In the course of our work, we often come across a view – although current in the pre-GDPR era, it is now outdated – that data processing can only be based on the consent of the data subject or on a legal requirement.

In contrast, the GDPR sets out 6 legal bases, the choice of which is often unclear for each processing operation. In this context, it is important to underline that each legal basis must be justified separately and may often require a balancing of interests’ test. Furthermore, it may well be that an employer processes different legal bases for different data of the same employee.

In terms of its fining practices in recent years, the NAIH is increasingly and more rigorously monitoring employers with regard to the documentation supporting the legal basis for data processing.

The importance of data accuracy

Inaccurate data management can cause several problems in the operation of a company:

Accurate record keeping therefore not only increases the efficiency of internal processes but also ensures legal compliance.

The role of data in management decision-making

Well-organized data not only facilitates day-to-day administration but also provides an important basis for strategic decision-making. For example:

Consequences of incorrect data processing

Inaccurate or incomplete data processing may lead to the following problems:

Best practices for effective data management

To avoid mistakes, the following practices are recommended:

Digitalization and the challenges of the future

The introduction of digital HR systems will significantly facilitate data management. Automated payroll systems, cloud-based document management and integrated timesheets have brought unprecedented efficiency and accuracy. The future of data management will be shaped using AI and predictive analytics to make even more efficient use of employee data. Systems that use AI can predict, for example, turnover trends, resource needs or even changes in employee performance. These innovations not only save time but also make data management more strategic.

Managing employee data in the digital age

The digital transformation and the emergence of the paperless office is one of the most important trends of our time, which has also brought fundamental changes in the way employees’ data is managed. The days of paper records are over, replaced by integrated HR systems that not only make data management faster and more accurate, but also more secure.

How do digital systems help data management?

Future challenges for data management

As the volume of data grows, so do the challenges of data management. We can expect significant changes in the following areas:

Managing employee data as a strategic tool

Employee data management is not just an administrative activity, it is one of the most important strategic tools in the company’s operations. Accurate and up-to-date data not only plays a key role in ensuring legal compliance, but also contributes to increasing the efficiency, operational stability and competitiveness of the company.

Modern technology not only makes data management simpler and more secure but also opens new opportunities for management and strategic decision-making. Keeping up with data trends and integrating digital innovations is essential for companies to meet the challenges of the future.

So, managing employee data is not just a must-do, it is an area that can lay the foundations for long-term business success and stability. Accurate, transparent and secure data management is not only in the interest of the company, but also of the employees, contributing to an efficient and harmonious working environment.