How to Protect Employee Data in Your Small Business

Key takeaways

• Your business handles more sensitive employee data than you think — from tax file numbers to bank details

• Australian cyber crime costs small businesses an average of $56,600 per incident

• Simple steps like multi-factor authentication and access controls can dramatically reduce your risk

• The right workforce management platform helps keep employee data secure by design
  
  

Table of contents

• Why employee data security matters for Australian businesses

• What employee data does your business collect?

• The biggest threats to your employee data

• How to protect employee data in seven steps

• Your legal obligations under Australian privacy law

• How the right workforce management platform supports data security

• Frequently asked questions about employee data security
  
  

Why employee data security matters for Australian businesses

If you run a small business, you're handling sensitive employee information every single day. Tax file numbers, bank account details, medical certificates, emergency contacts — it's all sitting in your systems. And cyber criminals know it.

The Australian Signals Directorate found that the average cost per cyber crime incident was $56,600 for small businesses in 2024–25 — up 14% from the previous year. That's money most small businesses can't afford to lose. Small and medium businesses remain prime targets because they often have valuable data but fewer resources for protection.

The problem is getting worse. The Australian Competition and Consumer Commission reports that Australians lost $3.1 billion to cyber crime in 2022 alone. And the Office of the Australian Information Commissioner continues to receive hundreds of data breach notifications each year — with the majority caused by malicious attacks.

Under the Privacy Act 1988 and the Notifiable Data Breaches scheme, you may have legal obligations to protect employee data and report breaches. But beyond compliance, a data breach can destroy the trust your team has in you. Your employees share personal details with you because they expect you to keep that information safe.

What employee data does your business collect?

Most small business owners don't realise just how much sensitive employee data they hold. Take a moment to think about everything you collect from your team:

• Tax file number declarations

• Bank account details for payroll

• Emergency contact information

• Resumes and job applications

• Medical certificates and health information

• Performance reviews and disciplinary notes

• Timesheets and roster data

• CCTV footage from your workplace

• Device and location data from work apps

• Superannuation details

Every piece of this information is valuable to criminals. Tax file numbers can be used for identity theft. Bank details can be exploited for fraud. Even something as simple as an emergency contact list reveals personal relationships that scammers can exploit.

The more you collect, the more you need to protect. And if you're still storing some of this in spreadsheets, paper files, or email attachments, your risk is higher than it needs to be. A dedicated HR software platform can help centralise and protect this data.

The biggest threats to your employee data

Cyber attacks targeting small businesses

Cyber criminals don't just go after big corporations. In fact, small businesses are often easier targets because they have valuable data but less sophisticated defences.

The most common attacks include:

• Phishing — fake emails that trick your team into clicking malicious links or giving up login credentials

• Ransomware — malware that locks your files until you pay a ransom

• Credential theft — hackers stealing usernames and passwords to access your systems

• Distributed denial of service (DDoS) — attacks that overwhelm your systems and take them offline

Small businesses are attractive targets because attackers know you're busy running your business. You might not have an IT team watching for threats around the clock. And you might be using the same password across multiple systems — a goldmine for hackers.

Human error and insider risks

Not every data breach comes from outside your business. Sometimes, the biggest risks are already inside your walls.

Common human errors that lead to breaches include:

• Misconfigured devices that expose data to the internet

• Staff opening scam emails and clicking malicious links

• Weak passwords that are easy to guess

• Sharing login credentials between team members

• Sending sensitive information to the wrong email address

Then there are insider risks. A disgruntled employee with access to sensitive files could download data before they leave. A well-meaning team member might share files through an unsecured personal app. Without proper access controls, anyone on your team could see information they don't need for their role.

Physical data security gaps

Digital threats get most of the attention, but physical security matters too. Old-fashioned theft and negligence can expose employee data just as easily as a cyber attack.

Watch out for:

• Laptops, tablets, or phones left unattended or stolen

• Paper records thrown in the regular bin instead of being shredded

• Filing cabinets left unlocked overnight

• Screens visible to visitors or customers

• USB drives with sensitive data that go missing

If a thief grabs an unlocked laptop with your payroll spreadsheet open, you've got a data breach on your hands — no hacking required.

How to protect employee data in seven steps

1. Turn on multi-factor authentication for every system

Multi-factor authentication (MFA) — sometimes called two-factor authentication (2FA) — is one of the simplest and most effective ways to protect your accounts. It works by requiring two or more forms of verification before granting access.

Typically, this means entering your password plus a one-time code sent to your phone or generated by an authenticator app. Even if someone steals your password, they can't get in without that second factor.

Turn on MFA for:

• Email accounts

• Payroll and accounting software

• HR and workforce management platforms

• Cloud storage services

• Any system that holds employee data

When choosing workforce management tools, look for platforms that support MFA for all user logins. Deputy, for example, offers MFA to help protect your team's accounts from unauthorised access.

2. Use strong, unique passwords with a password manager

Weak passwords are an open door for attackers. "Password123" or your business name followed by "2024" won't stop anyone.

A strong password should be:

• At least 12 characters long

• A mix of uppercase letters, lowercase letters, numbers, and symbols

• Unique for every account — never reused

The challenge is remembering all those passwords. That's where a password manager comes in. Tools like 1Password, Bitwarden, or LastPass generate strong passwords and store them securely. Your team only needs to remember one master password to access everything else.

Make password manager use a standard part of onboarding for new team members. It's a small step that dramatically reduces your risk.

3. Limit access to sensitive data by role

Not everyone in your business needs access to every piece of employee data. Your floor supervisor doesn't need to see tax file numbers. Your casual team members don't need access to payroll records.

The principle of least privilege means giving each person only the access they need to do their job — and nothing more. If someone doesn't need certain data, they shouldn't be able to see it.

Role-based access controls let you set permissions by job role rather than individual. When someone changes roles or leaves your business, you update their permissions in one place.

Deputy lets you set role-based permissions so each team member only sees the data they need. Managers can access roster and timesheet information for their location, while sensitive HR data stays restricted to those who genuinely need it.

4. Train your team to spot phishing and scams

Your team is your first line of defence against cyber attacks — but only if they know what to look for.

Phishing emails are getting more sophisticated. They might look like they're from the ATO, your bank, or even a colleague. The goal is always the same: trick someone into clicking a link, opening an attachment, or handing over login credentials.

Train your team to:

• Check the sender's email address carefully — not just the display name

• Hover over links before clicking to see where they really go

• Be suspicious of urgent requests for money or sensitive information

• Verify unexpected requests through a separate channel, like a phone call

• Report suspicious emails to a manager or IT contact immediately

Make security awareness part of your onboarding process and run refresher training at least once a year. Some businesses run simulated phishing tests to keep teams sharp and identify who might need extra support.

5. Keep software and devices updated

Software updates aren't just about new features. They often patch security vulnerabilities that hackers are actively trying to exploit.

When you ignore that "update available" notification, you're leaving known security holes open. Attackers scan for systems running outdated software because they know exactly which vulnerabilities to target.

Set up automatic updates wherever possible for:

• Operating systems on computers and mobile devices

• Web browsers

• Business applications

• Antivirus and security software

• Router and network equipment firmware

If automatic updates aren't an option, set a recurring calendar reminder to check for updates weekly. Don't let "I'll do it later" become "I forgot for six months."

6. Use a secure workforce management platform

If your employee data is scattered across spreadsheets, email threads, paper files, and multiple apps, it's harder to keep secure. Every additional system is another potential entry point for attackers — and another place where things can go wrong.

Centralising employee data in a single secure platform reduces your attack surface. Instead of protecting a dozen different systems, you focus your security efforts on one.

When evaluating workforce management platforms, look for security features like:

• Multi-factor authentication for all users

• Single sign-on (SSO) integration with your identity provider

• Mobile Device Management (MDM) support

• Data encryption in transit and at rest

• Role-based access controls

• Audit logs that track who accessed what and when

Deputy offers these security capabilities to help protect your employee data. With MFA, SSO integration through providers like OKTA and Microsoft Azure, MDM support, and role-based access controls, the platform is built with security in mind.

7. Create a data breach response plan

Even with strong defences, breaches can still happen. The question isn't just how to prevent a breach — it's how quickly you can respond when one occurs.

A data breach response plan should include:

1. Contain — stop the breach from spreading by isolating affected systems, changing passwords, and revoking compromised access

2. Assess — determine what data was affected, how the breach occurred, and who might be impacted

3. Notify — if it's an eligible breach under the Notifiable Data Breaches scheme, report it to the Office of the Australian Information Commissioner and affected individuals

4. Review — analyse what went wrong, update your security measures, and train your team on any changes

Write your plan before you need it. Assign clear responsibilities so everyone knows their role. Keep contact details for your IT support, legal adviser, and the OAIC readily accessible.

Your legal obligations under Australian privacy law

The Privacy Act 1988 and the Australian Privacy Principles (APPs) govern how businesses collect, use, store, and disclose personal information. If your business has annual turnover of $3 million or more, you're covered by the Privacy Act.

Some smaller businesses are also covered, including:

• Health service providers

• Businesses that trade in personal information

• Contractors providing services under a Commonwealth contract

• Businesses related to organisations that are covered

Under the Notifiable Data Breaches scheme, covered organisations must notify the OAIC and affected individuals when a data breach is likely to result in serious harm. You have 30 days to assess whether a suspected breach is notifiable.

Penalties for serious or repeated breaches can be significant. Individuals can face penalties of up to $360,000, while organisations can face penalties of up to $2.1 million — or more for the most serious breaches under amendments introduced in recent years.

Even if your business isn't legally required to comply with the Privacy Act, following its principles is good practice. Conducting a regular compliance audit can help you identify gaps in your data protection practices.

For more information about your obligations, visit the OAIC privacy guidance for organisations.

How the right workforce management platform supports data security

When you're choosing tools to manage your team's rosters, timesheets, and HR information, security should be a key factor in your decision. The platform you choose will hold some of your most sensitive employee data.

Deputy takes a security-first approach to workforce management. Here's how the platform helps protect your employee data:

• Multi-factor authentication — requires a second form of verification beyond passwords, making it harder for attackers to gain access

• Single sign-on (SSO) — integrates with identity providers like OKTA and Microsoft Azure, letting your team use their existing corporate credentials

• Mobile Device Management (MDM) — helps you manage and secure the devices your team uses to access Deputy

• Role-based access controls — lets you set permissions so each team member only sees the data relevant to their role

• Encryption — protects data both in transit and at rest

Deputy is used by 385,000 workplaces worldwide, from small cafes to large retail chains. The platform brings payroll, rostering, timesheets, HR, and communication together in one place — reducing the number of systems you need to secure.

When your employee data lives in a single, secure platform rather than scattered across spreadsheets and email threads, you have better visibility and control. You can see who has access to what, track changes, and update permissions quickly when team members change roles or leave.

Frequently asked questions about employee data security

How does Deputy help protect my employee data?

Deputy uses multi-factor authentication, single sign-on, Mobile Device Management, and role-based access controls to help keep your team's data secure. The platform also encrypts data in transit and at rest, and provides audit logs so you can track access to sensitive information.

What should I do if my business experiences a data breach?

Contain the breach immediately by isolating affected systems and changing compromised credentials. Assess what data was affected and how the breach occurred. If it's an eligible breach under the Notifiable Data Breaches scheme, notify the OAIC and affected individuals within the required timeframe. Finally, review your security measures and update them to prevent similar incidents.

Does my small business need to comply with the Privacy Act?

If your business has annual turnover of $3 million or more, you're covered by the Privacy Act. Some smaller businesses are also covered depending on the type of data they handle or the sector they operate in — including health service providers and businesses that trade in personal information. Check the OAIC small business guidance to understand your specific obligations.

Can multi-factor authentication really prevent unauthorised access?

MFA adds an extra verification step beyond passwords, making it significantly harder for attackers to access accounts even if they steal login credentials. While no security measure is perfect, MFA stops the vast majority of automated attacks and makes your accounts far more secure than passwords alone.

How do I limit who can access sensitive employee information in Deputy?

Deputy lets you set role-based permissions so each team member only sees the data they need for their role. You can configure access levels by location, by role, or by specific data types. When someone changes positions or leaves your business, you can update their permissions in one place.

Take the next step to protect your team's data

Protecting employee data doesn't have to be overwhelming. Start with the basics — turn on multi-factor authentication, use strong passwords, and limit who can access sensitive information. Then build from there with regular training, updated software, and a clear response plan.

The right workforce management platform makes security easier by bringing your employee data into one secure place with built-in protections. If you're ready to see how Deputy can help you manage your team while keeping their data secure, try Deputy free today.