Records management in the United Kingdom: Part II--Records retention

In the previous edition of "The World of Records Management" we introduced readers to records management in the United Kingdom by outlining the historical developments that color the complexion of records management in this country. We continue our discussion of records management in Britain with a discussion of records retention--the development of policies and programs which manage how long records are kept. We will cover records retention in both the public and private sectors in Britain, and we will make many observations concerning how records retention laws and practices in the U.K. compare with the situation here in the United States.

In the previous column, we noted that the British archival establishment may have "invented" the concept of records retention scheduling, at least in its modern form, with the 1877 amendments to the Public Record Office Act. These amendments authorized the destruction of records of the national government which were not deemed to possess "sufficient public value to justify their preservation." Under authority of this law, government departments were authorized to prepare "schedules" of records to be destroyed. By contrast, it was not until 1943 that the first records disposal schedule was developed by the U.S. National Archives for implementation in our federal government, as authorized by the Records Disposal Act of 1943. Thus, it was the British rather than the Americans who pioneered the concept of the records retention schedule as a tool for destroying useless records of the national government.

We will return to a discussion of records retention in the British national government later in this article. But first, let's take a detailed look at records retention in the private sector, in business and industry, and see how the situation compares to the U.S.

THE CONCEPTUAL FOUNDATIONS FOR RETENTION

The conceptual basis for records retention scheduling, in Britain or any other country, lies in the concept of the information life cycle. In his book, How to Manage Your Records: A Guide to Effective Practice, Peter Emmerson, one of the leading records managers in Britain, defines the information life cycle as consisting of three main stages: the current stage, when records are active; the non-current stage, when records are inactive; and the archival stage, when records are useful for historical rather than business purposes. Mr. Emmerson also defines another core records management concept that is essential to records retention program development--the records series. He writes that "a records series consists of records which arise from the same system, relate to a specific function, activity or transaction, are arranged in a single sequence--numerical, alphabetical, or chronological or a combination of these--and which may have the same physical form."

These two concepts, taken together, form the basis for developing records retention policies in Britain--separate retention periods are usually established to govern the life cycle disposition of each records series. Mr. Emmerson also writes that the overall aim of a "retention module" (a component of a larger records management program) is to "ensure that records are retained for as long as they have positive value for an organization and for no longer...Records have 'positive value' when they are required for the conduct of an organization's business in terms of operations and compliance with regulatory and legal requirements."

These underlying concepts of records retention in the U.K. are very similar to those here in the United States. One difference: the information life cycle is usually considered to be composed of more than three stages here. The newest book on records management in the U.S., Information and Records Management (Fourth Edition, Glencoe Publishing, 1995), defines a total of five stages in the information life cycle: creation, distribution and use, storage and maintenance, retention and disposition, and archival preservation. Otherwise, the situation appears to be very similar.

THE LEGAL FRAMEWORK FOR RECORDS RETENTION IN BRITAIN

With respect to the number of laws and regulations imposing requirements on regulated parties to retain records, the United States is, far and away, the most heavily regulated country in the world. According to one widely accepted sourcebook on legal records retention requirements in the U.S., there are some 4,700 federal statutes and regulations and thousands more state laws imposing records retention mandates on regulated parties. The regulatory situation is far less onerous in Britain; during the past twenty-five years this country has enacted a relatively small number of statutes which contain records retention requirements. We will review the records retention laws of general applicability--those that are binding the most or all business enterprises.

BRITISH RECORDS RETENTION LAWS OF GENERAL APPLICABILITY

These laws are of two types: those containing specific records retention requirements expressly stated in the law, and those containing no specific retention requirement but indirect retention implications. The major retention laws of general applicability are:

* The Companies Acts of 1948, 1976 and 1985. The 1948 law made no direct reference to records retention, but management personnel in British companies had traditionally considered that there was an implied respoizsibility under this law to retain certain "statutory" records permanently, for the life of the business. These included important corporate documents such as board minutes, shareholder records, and registers or books of account. The 1976 act did establish some specific retention requirements, which were carried forward in the 1985 law. Section 790 of this law states that "accounting records which a company is required to keep must be preserved by it (1) in the case of a private company, for three years from the date on which they are made, and (2) in the case of a public company, for six years from that date." These accounting records "must be sufficient to show and explain the company's transactions, and must be such as to ...disclose with reasonable accuracy, at any time, the financial position of the company at that time ..." This law imposes fines and imprisonment as penalties for officers of companies who fail to comply with its provisions. By way of comparison, there is no national legislation in the U.S. containing records retention provisions applicable to accounting records that is analogous to these Companies Acts. Accounting records must be retained to defend an organization's tax liability, but the U.S. Internal Revenue Service does not lay down a specific time period; only the rather nebulous requirement that these records must be retained for as long as they "may be material to the administration of any Internal Revenue law."

* The VAT Act of 1983 and the Finance Act of 1985. Records retention requirements applicable to documentation supporting Britain's ualue added tax are contained in Section 7 of the VAT Act of 1983, which establishes general requirements for VAT recordkeeping. Under this law, Customs and Excise Notice No. 700 changed the retention period for VAT-related documentation from three to six years. This retention requirement was promulgated as a clause in the Finance Act of 1985. Since the U.S. has no value added tax, there is no legislation analogous to these British laws in this country.

* The Limitation Acts of 1939, 1976 and 1980. These laws contain indirect retention implications, rather than direct requirements expressly stated. They are analogous to our statutes of limitations; that is, they indicate the length of time during which one party has a legal right to sue another party. Thus, the parties may infer that they may need to retain records during this period of time either to prosecute or defend against a lawsuit, but there is no specific records retention requirement stated in the law. The 1939 Act established a limitation of six years within which legal action must be brought before the courts, except in the case of personal actions, which was limited to three years. The 1976 Act modified the provision regarding personal actions by stating that the period of three years can date from the time at which the claimant first recognizes that he or she has a basis for a legal action. The 1980 Act contained three limitations relevant to records retention: For simple contracts--six years from the last date at which any action in the matter took place; for contracts under seal--a twelve year limitation; and for personal injuries--a three year limitation. As is true in the U.S., these statutes of limitation have had a major influence on the records retention policies of many organizations in the United Kingdom. Here in the U.S., statutes of limitation on these matters are enacted at the state level rather than by the Congress, so the periods of limitation would vary by state.

* Laws Applicable to the Retention of Pension Records. Several British statutes and the regulations implementing them contain provisions applicable to the retention of pension records kept by employers. Regulations promulgated under the Income and Corporation Taxes Act of 1988 require that "all books, documents and records" must be preserved by the pension administrator for a period of six years following termination of the pension plan. Regulations promulgated under the Finance Act of 1970 require that the same records be preserved by the pension administrator for a period of tltree years following termination of the plan to which they relate. However, pension "declarations" must be preserved for a period of six years under these regulations. These retention requirements are similar to those contained in the U.S. Employee Retirement Income and Security Act (ERISA), which mandates a retention period of six years for records related to the administration of pension plans.

INFLUENCES OF THE EUROPEAN UNION

As a member of the European Union (successor organization to the Common Market and the European Community) since 1972, Britain is subject to compliance with the legislation and regulations imposed by the EU on all its member states. This would include any records retention requirements contained in EU laws and regulations. Since EU legislation supersedes laws enacted by the British Parliament, such requirements can be, in some cases, more onerous than those imposed at the national level. An example is the requirements of the competition and fair pricing policies promulgated by the EU, which mandate the retention of certain accounting and sales documentation. Another example is the EU requirements applicable to liability for defective products, which prescribe a retention of ten years. The EU employs inspectors having extensive powers to request and obtain infonnation, and this organization can impose fines and other penalties for failure to comply. Retention regulations covering such areas as environmental management may also be forthcoming from the EU.

RECORDS RETENTION IN THE BRITISH NATIONAL GOVERNMENT

In order to understand the records retention situation in the British government today, it is necessary to look back to 1954. In that year the Grigg Committee, a committee charged with examining recordkeeping efficiencies in the British government, issued its report, referred to as the "Grigg Report." This report reaffirmed the current practice that the responsibility for the selection and transfer of records to the Public Record Office (the British national archives) lay with the creating departments in the national government. The report further recommended the appointment of "Departmental Records Officers" in each department to have "care of its papers from the time they are created or first received until they are disposed of either by destruction or by transfer to the Public Record Office." Perhaps most importantly, however, the Grigg Report recommended a fundamental change in the basic methods of records retention and disposition in the British national government. We noted earlier that the records retention schedule had been the primary instrument of records retention and disposition in the British government since 1877. The Grigg Report of 1954 recommended that the retention schedule method of records disposition be largely abandoned because it was considered to be too cumbersome, labor-intensive and ineffective. In its place, the Grigg Committee recommended a records disposition review process, unlike anything we have in the United States, which remains in place today.

RECORDS DISPOSITION REVIEW PROCESS

The disposition of the records of all government departments in the U.K. is governed by the Public Records Acts of 1958 and 1967, which replaced earlier legislation enacted by Parliament in 1838, 1877 and 1898. These laws establish a system for disposal of public records consisting of three main components: disposal lists, and first and second reviews, described as follows:

* Records Disposal Lists. These lists are prepared (usually by Departmental Records Officers) in all departments, covering series of records whose content is broadly similar and whose disposal can be effected by a single retention policy without the need for a document-by-document review.

* First Review. The great majority of registered files of a government department (those officially "registered" or filed in a departmental Registry Office) contain a mixture of papers both important and unimportant and are thus unsuitable for inclusion in a disposal list. Such records are subjected to a two-stage file by file review process. The first review takes place five years after the last action on a file. Its purpose is to ascertain whether or not the department is likely to require the record any longer for its own administrative purposes. Based on this first review, files may be designated for immediate destruction, for destruction after a further set period of time, or for second review. The first review may, by agreement with the Public Record Office, be omitted when the nature of a records series indicates that little or nothing may be destroyed before the second review. Departments may transfer records to "intermediate storage" (a term analogous to "records center") when they have completed first review and have been designated for second review. The responsibility for properly implementing the first review process rests with the Departmental Records Officers, but officials from the Public Offices may monitor the process in a department.

* Second Review. The second review normally takes place 25 years after a particular records series was first opened. Files selected for permanent preservation are transferred to the Public Record Office or to some other place of deposit and the remainder are destroyed. Public records selected for permanent preservation are required to be transferred to the Public Record Office before they are thirty years old, counting from the date of file closure. In cases where a department needs to retain records for administrative or other special purposes longer than thirty years, the approval of Britain's Lord Chancellor is required. This senior minister (who exercises jurisdiction over the Public Record Office) serves as Speaker of the House of Lords and Head of the Judiciary.

COMPARISONS WITH THE UNITED STATES

Records retention schedules continue to be used as the primary means of effecting the disposition of records in the United States. This statement applies not only to the records of the U.S. government, but to records maintained by state and local governments and organizations in the private sector as well. The two-tier records disposition review process used by the British national government is very rarely used in this country. In fact, this writer has seen it used in only one business setting--law firms --in which attorneys responsible for certain cases or clients review the inactive files after, say, five and ten years, and make judgments (largely arbitrary) as to what to retain and what to discard.

From a U.S. perspective, what are we to make of this British records review process? The key question is: Is the records review process or the retention scheduling process more effective as a means of effecting the disposition of useless records? Having developed records retention schedules for the past quarter century, this writer can testify to the problems and inefficiencies associated with this approach. On the other hand, it would appear that a two-stage review process such as described above would result in inefficiencies of its own--chiefly the retention of many useless records for excessive time periods. A more in-depth comparison of these two methods of records disposition may be the subject of a future article.

REFERENCES

Derek Charman. "The Expanding Role of the Archivist." Records Management Quarterly. Jan. 1980.

Peter Emmerson, Ed. How To Manage Your Records: A Guide To Effective Practice. Cambridge, England: ICSA Publishing. 1989.

International Council on Archives. European Archival Conference on the Creation and Organization of Contemporary Records. Microfiche of National System Descriptions: United Kingdom. Paris: International Council on Archives. 1985.

Elizabeth Shepherd. "Records Management in Britain--A Review of Some Developments in Professional Principles and Practice." Business Archives Principles and Practice. No. 67, May, 1994.

Copyright Association of Records Managers and Administrators Inc. Jan 1996
Provided by ProQuest Information and Learning Company. All rights Reserved