Summary In the proposed approach, the blockchain based employee performance assessment system is introduced to enhance the security and privacy of employee data. The proposed three phases are used to enhance the security mechanism in the employee performance assessment system: authentication, encryption, and data retrieval phase. The authentication process is performed in the first phase by utilizing Lamport Merkle digital signature (LMDS) algorithm. The LMDS algorithm generates and verifies a digital ID for each employee. In the next phase blockchain based encryption is carried on employee data using the new light weight cryptography algorithm (NLCA), which uses a 16 bytes (128 bit) block cipher and needs 16 bytes (128‐bit) key to encrypt the data. At last, the data retrieval phase allows users to access the data through the secret key. Proposing a modified Diffie‐Hellman (ReDH) algorithm to exchange the secret key to ensure security. The proposed approach is implemented in the Python platform, and the performance of the proposed approach is compared with existing methods in terms of encryption time, throughput, decryption time, storage efficiency, and search time. Using a blockchain‐based employee performance assessment system enhances system trust level, transparency, accountability, and security efficiency.