How HRM software enhances compliance and data security

Privacy laws govern how businesses must handle sensitive employee data, like payroll records and medical information. 

For example, UK law says you can only store recruitment data for as long as there’s a clear need. But the regulation doesn’t dictate how you dispose of it–you’re free to overwrite it, crypto shred it or destroy its storage device.

Additionally, all UK organisations must comply with local laws, like the UK GDPR, in the workplace. If you hire even a single employee abroad, you’re usually subject to that country’s rules too. For example, having just one US-based worker makes you answerable to the Health Insurance Portability and Accountability Act (HIPAA).

The good news is that international privacy laws usually require similar basic security measures, which are:

• Only collect data for clear and specific reasons

• Limit what you collect to what’s truly necessary and relevant

• Process data in a fair and transparent manner

• Take reasonable measures to keep data secure

• Let employees access and correct information

• Dispose of data securely as soon as you no longer need it

Effective HR management is often the best line of defence when it comes to enhancing data security. After all, HR professionals are responsible for collecting, organising and storing information–making protecting sensitive employee data a core part of your role.

So while you might not be a data protection officer, you’re often the one choosing systems and developing processes for keeping your company safe.

But HR’s responsibility doesn’t stop there. You’re no doubt tasked with putting many of the data protection laws into practice at your organisation. That means researching all the relevant legislation, translating it into company policy and making sure everyone both understands and follows these rules.

What’s more, HR has to satisfy both privacy laws and employee demands. “The biggest challenge is the need to balance openness with security,” says Alisa Volynets, HR Business Partner at Rankup. “On the one hand, our culture cultivates transparency, but on the other, there are certain restrictions that don’t allow us to share all the data that interests employees.”

Data security is about more than avoiding fines. Privacy laws are in place to protect organisations and individuals from serious risks, namely the possibility of data breaches that expose sensitive information.

Major breaches can have a devastating impact on companies and employees, potentially leading to:

• Identity theft

• Fraud

• Stolen money or assets

• Loss of access to data

• Extortion

Breaches are becoming increasingly common, with half of UK businesses reporting a security incident in the past year. The government now requires employers to implement robust security measures, like encrypting software and installing firewalls. 

If a company’s actions lead to a breach, whether intentional or through negligence, they can face penalties of up to £17.5 million or 4% of their annual profits. 

But fallout from security breaches isn’t limited to fines. If news about improper data management goes public, it can lead to negative press–as it did with big brands like H&M and Uber.

And poor security practices can quickly damage relationships with employees. As Alisa says, “Managing HR from a compliance perspective is not just a box-ticking exercise. It is important to understand that you are building trust with your team by ensuring that their personal information is handled responsibly.”

When the stakes are so high, it’s easy to feel overwhelmed by data security and compliance tasks. But you don’t need to take it all on alone; the right HR management software can shoulder the burden of processing data securely and protecting your system against threats.

Not all HRM software lets you ensure data security, though, so here are the features to look for when choosing a solution.

HR departments gather lots of information from employees, especially during onboarding. Without an effective HRMS, you may find yourself sending emails with sensitive information back and forth or with new hires. The trouble with outdated practices like this is the possibility of data getting lost or sent to the wrong person.

HR management software lets you collect data through a secure employee self-service portal where your team can enter and update their personal information. Everything gets stored in one secure location, meaning less risk of personal data getting scattered or falling into the wrong hands. 

As a bonus, self-service portals promote transparency and trust, as employees get visibility over exactly which information you collect and store on your system.

As cyber attacks become more frequent, you need to take stronger measures for protecting employee and company information.

By encrypting data, you can guarantee all your files remain secure, even if hackers break into your system. IBM research shows that organisations using encryption can reduce the financial impact of a breach by up to $220,000.

Make sure your chosen software uses the highest standards of encryption and protects data both during transit and at rest. Personio, for example, offers a combination of:

• Transport Layer Security (TLS)

• HTTP Strict Transport Security (HSTS)

• AES 256

In the worst case scenario of hackers gaining access to your system, important files can be lost or damaged–which means you may lose critical information like payroll histories and employment records.

Data backups let you recover these files immediately, meaning it’s still accessible and available to employees. This spares you from potential compliance issues and minimises disruption to your operations.

To give employees peace of mind, Personio lets them create backups of their own files and documents. Not only do they get more control, but this feature increases their confidence in how your organisation handles data security. 

The right HR management software lets you share information on a needs-to-know basis. Advanced controls ensure only authorised personnel can access personal data, like medical records and leave requests, which employees might not want widely known. 

Access controls usually comprise several features:

• Role-based permissions: You assign roles to users such as administrator or manager and decide which areas of your system each one can access.

• Password policies: This feature requires employees to create passwords that meet certain standards. For example, Personio rejects any passwords that are under eight characters long or only contain letters. 

• Multi-factor authentication: When teams log into their accounts, you can ask them to verify their identity by entering a code sent automatically to their device.

• Single sign-on: You can allow individual employees to use the same credentials to sign into every work-related app, reducing the risk of forgotten passwords and shared accounts.

Data protection laws are complex and constantly changing, making it hard for you to stay in the know. But that doesn’t mean you have to resign yourself to endless research. 

To keep things simple, look for an HRMS that automatically tracks and applies local regulations, such as the UK GDPR or California Consumer Privacy Act (CCPA).

Is your company expanding abroad? Leading HRM software like Personio automatically adjusts data privacy controls according to your location.

Take our absence management feature, for example. Personio automatically retains records based on each employee’s location, whether that’s for three years in the UK or six years in Germany.

Security isn’t a one-time task, and you have to constantly adapt your strategy to keep pace with technological advances and emerging threats. As you refine your strategy, you’re likely to hit road bumps that require expert guidance. 

So look for HRM solutions with different support options to act as a safety net, whether that’s for troubleshooting or major security incidents. The ideal tool should include:

• Advice: Experts should be available 24/7 to help you navigate the security features, implement best practices and resolve issues like glitches and bugs. This ensures that you can quickly fix problems before they cause any system downtime, security vulnerabilities or holes in your compliance measures.

• Incident reporting: There must be a protocol for reporting issues so security teams can quickly patch vulnerabilities or neutralise threats. For example, Personio launched a Bug Bounty program through our partnership with Intigriti so we can reward anyone who brings issues to our attention.

• Proactive threat monitoring: Security teams should constantly check the system for issues. “Regular audits and data monitoring are just good practice,” says Tetiana Hnatiuk, Head of HR at Skylum. “Instead of waiting for data breaches, you should identify risks early on and prevent them.”

Worrying about data breaches and compliance issues shouldn’t keep you up at night; with Personio, you can rest easy knowing all your sensitive information is in good hands.

Personio’s range of security features–including the highest standard of encryption, regular data backups and centralised storage–keep your employee and company information safe.

And since many risks come from inside companies, Personio offers intuitive data access controls and password protection. Customisable role-based permissions mean your team only has access to the files they need to do their jobs.

Finally, no matter where your company hires, you can count on Personio to keep you compliant with local regulations. We automatically adjust features like time and absence management based on your location.

Leave data security and compliance to us so you can focus on what matters most: your people.

Discover secure HR software that helps you stay compliant

Personio’s specialised platform protects HR and employee data–keeping you compliant with relevant privacy regulations.

Maximise data security with Personio’s digital employee file

Data security and compliance refers to the data safeguarding practices required by law in your region or industry. It encompasses many aspects of data management, including how you collect, store and manage access to personal information. If you don’t follow these practices, you may leave your organisation vulnerable to security breaches and legal penalties.

Compliance and human resources management is your strategy for making sure all your company’s policies and practices meet all relevant laws. Where HR data protection is concerned, it covers your processes for preventing the misuse, theft or unauthorised access of sensitive employee information. It also involves respecting employee rights: for example, by letting them view their files or informing them how you’ll use their data.